In a time where the use of social media technologies, like Facebook, Twitter, and LinkedIn, are playing an increasing role in employment litigation, the threats offered by e-mail usage are often considered an afterthought or perhaps forgotten altogether. Yet, with the ubiquitous nature of e-mail in the workplace, some employers fail to fully consider or appreciate the potentially harmful consequences e-mail use can have on the workplace and throughout the course of litigation. Indeed, as with anti-harassment and anti-retaliation policies, a well-drafted e-mail usage policy is becoming the sort of policy that should be revisited and updated over time or, for newer businesses just implementing general policies for the first time, drafted correctly from the start.

Moreover, if your company does not have an appropriate policy for the handling, retention, and destruction of e-mail (and other electronic records), it can possibly cost your company in sanctions or penalties for spoliation of evidence, i.e., the intentional or negligent withholding or destruction of relevant evidence, or for other violations of federal or state law. Further, your e-mail handling and retention policy, or the absence of one, can impact your ability to investigate and defend against claims such as the one described above. Therefore, it is important to consider whether your company has an appropriate e-mail handling and retention policy in place that can withstand the rigors of litigation. In evaluating your company policy, keep in mind the following considerations:

1.  Outline permitted and prohibited e-mail content. Your e-mail usage policy should be clear, concise, and in writing, and it should outline permissible and prohibited content, including types of documents, images, and text, in all e-mails transmitted over the company’s e-mail system. While it is certainly advisable to have a content filter in place to prevent or intercept the transmission of e-mails containing prohibited content, no filter is fool-proof. Thus, it is important to include rules related to the use of e-mail, especially for messages unrelated to business, so that it is clear that the use of profanity; obscenity; and sexual or racist jokes, slurs, innuendos, or images are expressly prohibited. By advising employees that all workplace policies relating to conduct, such as those anti-discrimination and anti-harassment policies contained in the employee handbook, apply at all times when using the company’s e-mail system, you can be in a better position to argue that you took meaningful steps to prohibit harassment in the first place.

As with other conduct policies, the e-mail policy should be included in the employee handbook. Your policy should also contain a disclaimer that e-mails are not private and may be monitored at any time. Although some states require employers to provide this notice, it is a prudent practice to provide such a notice in any case since, without this disclaimer, a company might not be able to conduct a full investigation of a claim of harassment or discrimination without potentially exposing itself to a lawsuit claiming a violation of an employee’s right to privacy. Further, violations of an e-mail usage policy should subject employees to discipline, up to and including termination of employment, which further serves to reinforce how serious your company takes the policy.

2.  Set the parameters for e-mail retention and deletion. Consider setting an internal retention policy that sets forth the manner and location in which e-mails are to be stored and deleted, including the length of time that an e-mail will be maintained on the server or on backup tapes before it is overwritten or automatically deleted. Since courts can require production of e-mails stored on employees’ local hard drives and workstations, which can be both costly and time consuming, consider whether to utilize a centralized archival system so that employees are unable to save messages in personal folders. Also, remember that while your company can factor cost into its determination about the length and manner of storage, the policy must take into account any regulatory preservation periods and other requirements applicable to your industry, such as those imposed by the Sarbanes-Oxley Act of 2002, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Financial Industry Regulatory Authority, Inc. (FINRA), as well as any statutes of limitations applicable to employment-related claims as set forth in federal and state legislation. Further, the policy should address requirements for maintaining data in its original, unaltered state, protecting it against internal and external security threats, and maintaining its accessibility within a suitable time frame.

3.  Accommodate litigation holds. Since your retention policy will be instrumental to your defense in litigation, it should also enable the execution of litigation holds. A litigation hold, issued once a company receives notice of a lawsuit, requires the company to preserve and maintain all documents and e-mails that are relevant to the claim. This may require the retrieval and preservation of e-mails that are scheduled for impending automatic deletion, so the policy and system should enable the halting of automatic deletion in accordance with the hold. Failure to prevent e-mails from automatic deletion, or even accidental deletion by employees unaware of the hold, can result in sanctions. For this reason, upon issuance of a litigation hold, it is critical that pertinent employees are made aware of the litigation hold and reminded of their responsibilities under the e-mail retention policy.

4.  Inform and educate your employees about the e-mail policy. Ensure awareness and understanding of the e-mail handling and retention policy by informing and educating employees about content limitations and the procedures for maintaining and deleting e-mails. In addition to its inclusion in the employee handbook, the policy should be conveyed to employees in a manner that is feasible for your company, such as through posting in a noticeable location and through compliance trainings and seminars. Regardless of the methods you choose to inform and educate your employees, you should obtain and maintain employee training attendance records and any “acknowledgments” that they have signed that indicate their receipt, understanding and agreement to abide by the company’s e-mail and other related policies.

Implementing an e-mail handling and retention policy that is appropriate to your workplace and is clearly communicated to employees in accordance with the above guidelines can help you avoid claims of harassment or discrimination from arising in the first place. Additionally, it serves an important purpose in ensuring that, if a claim does arise, your company will be able to promptly and lawfully investigate and defend against it and be in compliance with applicable regulations and laws.

Because of crowded dockets and increased court and litigation costs, arbitration has become a popular method to resolve disputes. Arbitration offers the advantages of potentially lower costs, faster outcomes, and limited grounds for appeal. In employment cases, increasingly, employers are looking to arbitration as a way to resolve disputes with former employees. Arbitration can appear especially attractive for national employers because it allows the potential application of a single set of rules to almost all employment-related disputes. A pair of recent decisions by the California courts, however, demonstrates that multi-state employers with employees in California must exercise caution in drafting arbitration agreements, for California courts may be inclined to overturn arbitration agreements if the terms appear unfair to the employee.

As background, the primary California case regarding the enforceability of arbitration agreements is Armendariz v. Foundation Healthcare Services, Inc., 24 Cal. 4th 83 (2000). Armendariz set forth the requirements for “essential fairness” in arbitration agreements, including: a neutral arbitrator, adequate discovery, all types of relief otherwise available in court, a written arbitration award that permits limited judicial review, and the employer must pay arbitrator’s fees and all costs unique to arbitration. Generally, an employee arguing that an arbitration agreement is unenforceable must show that the agreement is both procedurally (i.e., whether it was negotiated or presented on a take it or leave it basis) and substantively (i.e., the terms of the agreement) “unconscionable.”

In a recent case, Mayers v. Volt Management Corp., 23 Cal. App. 4th 1194 (2012), the California Court of Appeal found both procedural and substantive unfairness. In Mayers, the former employee sued his former employer, alleging several violations of the California Fair Employment and Housing Act (“FEHA”), including disability discrimination, failure to engage in the interactive process, and age discrimination. The employer moved to compel arbitration pursuant to a written arbitration agreement between the parties that covered “any and all employment related disputes.”

The employee challenged the arbitration agreement, claiming it was unconscionable because it was drafted by the employer and because the employee had not been provided a copy of the particular rules of the American Arbitration Association that would govern the arbitration. The employee also argued that the arbitration agreement was unconscionable because it potentially exposed him to paying his employer’s attorneys fees – something that could not occur under the FEHA in state court. The Court of Appeal agreed with the employee and found that these provisions rendered the agreement unconscionable, for the employee was at “greater risk” in the arbitration than he would have been in state court.

Two weeks later, in Ajamin v. CantorCO2e, 203 Cal. App. 4th 771 (2012), the California Court of Appeal considered the issue of whether an arbitration agreement alleged to be unconscionable could be enforced when, among other factors, the employee challenging the arbitration agreement hired an attorney to review her employment agreement, which provided for arbitration, before signing it. The Ajamin court first considered who determines if the arbitration agreement itself is unconscionable – the arbitrator or the court. The court determined that in the absence of “clear and unmistakable evidence” showing that the arbitrator could determine the validity of the arbitration agreement, the trial court and not the arbitrator determined whether or not the arbitration agreement itself was unconscionable. Moreover, the Court stated “the default expectancy is that the court would decide the matter.”

The Ajamin court found the agreement in question to be procedurally and substantively unconscionable and refused to enforce it. Procedurally, the court found that although the employee had six months to review the agreement, and even had the agreement reviewed by legal counsel, the employee still did not have equal bargaining power because the employee’s promotion and raise was conditioned upon signing the agreement. Substantively, the court found the agreement unconscionable because, in part, it had the employee waive her rights to certain relief otherwise found under California law.

The Mayers and Ajamin decisions demonstrate that including provisions to an arbitration agreement that appear to be beneficial to employers or that add risks for the employee not found under state law may lead to a court refusing to compel arbitration altogether. Particularly concerning is that provisions that are commonly found in other types of agreements – such as a prevailing party’s attorney’s fee clause – can be inconsistent with state law and thus render an entire arbitration agreement unconscionable.

Mayers and Ajamin are two examples of the California Court of Appeal carefully scrutinizing whether a particular arbitration provision is unconscionable under applicable state law. If a California employer does not carefully review state law before drafting their arbitration agreement, the employer runs the risk of the entire agreement being invalidated due to a single improper provision.

In the past few weeks, the Equal Employment Opportunity Commission (“EEOC”) has decided two matters that will likely have a broad-reaching, significant impact on employers. First, the EEOC revised its guidelines on an employer’s use of arrest and conviction information when making employment decisions. Second, the EEOC extended Title VII’s prohibition on sex discrimination to transgender individuals.

EEOC Guidance Limits the Use of Arrest and Conviction Records in Employment Decisions

On April 25, 2012, the EEOC issued revised guidelines detailing the limits on an employer’s use of arrest or conviction information when making employment decisions. Given the prevalence of background checks, as well as the fact that 65 million Americans have a criminal record, the new guidelines directly address an issue many employers deal with regularly. The new Guidance also provides employers with information on how to avoid liability in screening applicants and considering criminal background information.

The use of arrest or conviction records is not expressly prohibited by Title VII; however, if the use of criminal background information when making employment decisions disparately impacts a certain class of people who are protected, then the practice could violate the law.

Looking to the new rules, it immediately becomes clear that many practices that are standard for most employers may now put them at risk for a Title VII violation. The EEOC now requires employers to consider arrest or conviction information on a case-by-case basis. Employers no longer may screen out applicants without considering the applicant’s background and the specific job at issue. Thus, for example, employers may not have policies that rule out an applicant based upon a felony conviction. Instead, employers will need to show through an individualized assessment that any specific exclusion from employment based upon a criminal background is job-related and consistent with business necessity.

When conducting the individualized assessment, employers must make the applicant or employee aware that he may be excluded from the position due to past criminal conduct and provide the individual an opportunity to demonstrate the exclusion does not apply. If the person does not respond to the employer’s attempt to gather information, the employer may make the decision without additional information.

In making an individualized assessment, employers should consider the following factors:

• The facts and circumstances surrounding the offense or conduct;
• The number of offenses for which the individual was convicted;
• Older age at the time of conviction or release from prison (yes the EEOC is advising you to look at age!);
• Evidence that the individual performed the same type of work, post-conviction, with the same or a different employer with no known incidents of criminal conduct;
• The length and consistency of employment history before and after the offense or conduct;
• Rehabilitation efforts, e.g education/training;
• Employment or character references and any other information regarding fitness for the particular position; and
• Whether the individual is bonded under a federal, state, or local bonding program.

While talking with an applicant about the details of a conviction is not that unusual, as many applicants include the “will explain” disclaimer on their job applications in the section that asks about convictions, the level of detail that is required is certainly new.

Moreover, for an employer to impose any kind of screening criteria, the company must have evidence to show the criteria is job related and consistent with business necessity. This inquiry will require employers to examine the nature and gravity of the offense or conduct, the time that has passed since the offense, completion of sentence or conduct, and the nature of the job held or sought. Employers will have to be able to justify any exclusion to employment based on criminal background. For example, if an employer wishes to exclude anyone who has a felony theft conviction in the past 10 years, the employer must demonstrate that engaging in theft shows a propensity for dishonesty – e.g., theft results in property loss – and that the duration of 10 years is narrowly tailored to satisfy the business necessity standard.

The employer must also demonstrate that the exclusion is relevant to the particular job at issue. A broad exclusion that applies to everyone is unlikely to be sufficient. Thus, if an employer wants to screen out all applicants with theft convictions, regardless of the job at issue, the company will not be able to have a blanket exclusion. Rather, the company will have to explain why the exclusion is relevant to each position in the company, from those in shipping and receiving, to groundskeepers, to administrative staff.

The new Guidance also addresses the use of arrest records. Employers are prohibited from using arrest records as exclusion to employment; however, employers may take action based upon the underlying conduct of the arrest if the conduct makes the individual unfit for the position in question.

This new Guidance may prove to have a large impact on employers nationwide given the prevalence of background checks as a standard procedure when hiring employees. Employers should review their current policies and procedures, including any employment applications and interview guides, to ensure compliance with the Guideline. However, as will be seen with the expansion of Title VII rights to transgender individuals, these are not the only policy changes employers may need to make.

EEOC Rules that Title VII’s Protections Extend to Transgender Individuals

The EEOC also recently determined, in what many are calling a landmark decision, that employment discrimination against a transgender individual because the person is transgender is discrimination based upon the person’s sex and thus covered by Title VII.

The case involved Mia Macy (“Macy”) a transgender woman who applied for a position as a ballistics technician with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATFE”). At the time of her application, Macy was presenting as a man. Following an interview, Macy was assured that she would be hired upon completion of a background check. Shortly thereafter, an outside agency hired by the ATFE contacted Macy to begin the background check.

Macy then notified the agency that she was in the process of transitioning from male to female and asked the information be relayed to the ATFE. Within five days of the notification, Macy was told that the job was no longer available due to budget cuts. When Macy contacted the ATFE’s EEO office about the change in status of her application, she was informed that the position had not been cut, but rather had been filled by someone who was further along in the background check process.

Macy filed a formal EEO complaint with the ATFE alleging she was discriminated against on the basis of her sex (female) and included “gender identity” and “sex stereotyping” as the basis of her complaint. In considering whether the EEOC had jurisdiction over Macy’s gender identity and sex stereotyping claims, the EEOC had to decide if such discrimination fell under Title VII’s prohibition on sex discrimination.

The EEOC ultimately concluded Macy’s claims were cognizable under Title VII as sex discrimination claims. In rendering its decision, the EEOC considered a prior Supreme Court decision, Price Waterhouse v. Hopkins, 490 U.S. 228, 239 (1989), in which the Court decided that Title VII prohibits “not just discrimination because of biological sex, but also gender stereotyping-failing to act and appear according to expectations defined by gender,” which it defined as including “not only a person’s biological sex, but also the cultural and social aspects associated with masculinity and femininity.”

This decision is important because it is the first time there has been definitive guidance from the EEOC to allow Title VII to include transgender individuals under its umbrella of protection. Employers should be aware of the decision and revise their policies accordingly and consider additional training as appropriate.

Combined, these two developments signal a continuing trend by the current EEOC to expand the protections of Title VII. These developments also show that although the defined classes under Title VII may appear static in name, they are more fluid in definition, evolving over time to include an ever-widening number of individuals under Title VII’s umbrella of protection. Indeed, given the EEOC’s examination of other areas, such as perceived stigmas in hiring practices against the currently unemployed, employers should expect additional, similar developments in the future. In the meanwhile, employers should carefully review their policies and procedures and determine where they differ from these decisions. Handbooks, applications, and interview guides may need to be updated, and additional training of managerial and supervisory employees may be required. As always, while the law may change, the ways for employers to best insulate themselves from liability, such as through updated and consistently applied policies, continues to remain the same.

Over the years, I have noticed that there are two general questions I receive when people find out I practice employment law. The first question is whether I am the person the asker of the question can call should she want to sue her employer. That always leads to the awkward response, “Well, probably not… um, I actually represent management side, so there’s a better chance that I’m the one helping fire you. Want another beer?” The second question, which comes a bit later, usually follows the form of “Can I be fired [or not hired or not promoted] because of [random non-performance-based reason].” And the answer to that question typically takes the form, “Well, yeah. That’s unfair, and your boss sounds like a jerk, but that’s legal. Want another beer?”

Most people are familiar with the standard protected classes – race, sex, age, religion, etc. – but beyond that, many people feel that if something is unfair, then it must somehow be illegal. Yet that is often not the case, at least in employment law. You can be fired for a host of reasons in at-will employment, such as for being a Cubs fan (an option I’m thankful my employers have decided to forego) or for not inviting someone to your happy hour (something you would never do, of course, because you like everyone you work with). And, perhaps most pertinently these days, you can usually be fired for being of the “wrong” political affiliation (not your political affiliation – the other one).

I was reminded of this the other day when I received a text from a friend (a diehard Democrat) who said her boss (a diehard Republican) had just described President Obama in some rather unflattering terms. My friend let the comment slide rather than get into an argument with her boss over his views of President Obama’s policies, in part because she was afraid she would lose her job. When I saw her later that day, she asked me what recourse she would have should her boss one day fire her simply for being a Democrat. This is not just an academic question. In the past several months, there have been several news stories about employees who claim they were fired for their political beliefs, including a waitress in Illinois who claims she was terminated for wearing a Tea Party bracelet during her shift.

The answer to my friend’s question is that her hypothetical termination, if really just based on her political affiliation, is likely legal. Unlike federal or state government employees, private sector employees often have little recourse if they are fired for their political beliefs. Neither Title VII nor any other federal law governing the employment practices of private employers prohibits discrimination on the basis of political beliefs. And while some states, such as New York, do prohibit discrimination based on political beliefs or affiliation, many states, including Wisconsin, have no such prohibition. After the federal and state level, employees are left with city or county ordinances for protection, such as the City of Madison’s Equal Opportunity Ordinance, which prohibits discrimination based on political beliefs, which it defines as “one’s opinion, manifested in speech or association, concerning the social, economic and governmental structure of society and its institutions.” Madison City Ordinances §39.03. And this discussion leaves aside those private employers who have a company-goal or agenda dedicated to a particular political issue or agenda, where the employer can argue that having employees of like-minded political affiliation is a benefit.

This is not to say that employers should make decisions based on an employee’s political affiliation or turn a blind eye to any workplace harassment based on an employee’s political affiliation. Claiming that an employment decision was based solely on political affiliation likely won’t protect you from allegations that your offered reason is really just pretext for an illegal discriminatory animus, such as one based on race or sex. For example, a terminated employee who happens to be a social conservative and who expresses his views in a religious context could claim that his termination was based on his religion, not his politics. Moreover, employers should actively deal with any harassment in the workplace that is based on political affiliation. Not only does such harassment likely violate any well-written anti-harassment policy, but it also risks lowering employee morale and creating unnecessary strife. There is also the very real risk that you will face allegations that a supervisor’s or coworker’s political statements against a particular candidate or particular issue were, in reality, discriminatory statements based on race, sex, or another illegal factor.

It is perhaps inevitable that politics will be a common topic of discussion in your workplace in the months ahead, and civil discourse is good. But when that discourse stops being civil and turns into disagreement verging on argument and harassment, then it should be dealt with like any other employee issue. On the bright side, after the upcoming elections are over and the right side wins (your side, of course), this issue will once again subside for a few years until the next election or hot-button national discussion, and we can focus instead on disagreeing vehemently with coworkers over other topics, such as sports or the office thermostat.

On April 12, 2012, the California Supreme Court handed down a long-awaited decision in Brinker Restaurant Corp., et al. v. Superior Court of San Diego County, No. DOO49331 (April 12, 2012). The decision has already received much press because it concerns an employer’s obligations under California law regarding how and when to provide rest and meal breaks to employees. A less-publicized, but no less important, aspect of the case concerns class certifications in employment litigation.

Employer Obligations Regarding Rest and Meal Breaks

Brinker Restaurant Corporation owns and operates restaurants throughout California, including such familiar eateries as Chili’s Grill & Bar and Maggiano’s Little Italy. The named plaintiffs in this litigation are all current or former hourly, non-exempt employees at one or more of Brinker’s restaurants. The plaintiffs’ complaint alleges, among other things, that Brinker failed to provide employees rest breaks and meal breaks, or premium wages in lieu thereof, due them under California law. With respect to the obligations of employers to provide meal and rest breaks, the California Supreme Court looked at three issues: (1) when rest periods must be provided; (2) when meal breaks must be provided; and (3) whether an employer must ensure employees perform no work during a meal period, or rather just make sure that a meal period is made available to employees.

In regards to rest periods, California law states, “Every employer shall authorize and permit all [non-exempt, hourly] employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 ½) hours.” IWC Wage Order No. 5, subdivision 12.

At issue was the timing of the rest periods. The state Court of Appeal interpreted this language to mean that employees are entitled to 10 minutes’ rest for shifts of three and one-half hours or more, to 20 minutes’ rest for shifts of seven and one-half hours or more, and so on. The California Supreme Court rejected this interpretation and held that an employer’s requirement under California law is as follows:

• 10 minutes’ rest for shifts from three and one-half to six hours in length;
• 20 minutes for shifts of more than six hours up to 10 hours; and
• 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.

With regard to meal periods, subdivision 11(A) of Wage Order 5 provides, “No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes,” absent a mutual waiver in limited circumstances. Subdivision 11(A) further provides, “[u]nless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an ‘on duty’ meal period and counted as time worked.” In addition to Wage Order No. 5, section 512 of the California Labor Code establishes a statutory (as well as a wage order) obligation: an employer must “provide the employee with a meal period of not than less than 30 minutes” for workdays lasting more than five hours and provide two meal periods for workdays in excess of 10 hours, subject to waiver in limited circumstances.

The plaintiffs argued that this language required employers to not only provide meal breaks but also to ensure that no work is performed by employees during meal breaks. The California Supreme Court rejected that interpretation and held that employers only must “relieve[] its employees of all duty, relinquish[] control over their activities and permit[] them a reasonable opportunity to take an uninterrupted 30-minute break” without impeding or discouraging the employee from doing so. Further, employers have no obligation to police meal breaks to ensure no work is being performed, and an employee working during a meal break will not automatically place an employer in violation of the law and subject the employer to liability for premium pay.

With respect to the timing of meal periods, the California Supreme Court concluded that “absent waiver . . . a first meal period [is required] no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.” Id. at 37. In so holding, the Court rejected the plaintiff employees’ contention that California law required a second meal period no later than five hours after the end of the first meal period if a shift is to continue.

Implications for Class Action Employment Litigation

In addition to the much-publicized meal and rest period issues, the Brinker case also decided important class certification questions that will affect employers defending against class action lawsuits in California. In Brinker,the plaintiffs sought to bring their claims on behalf of themselves and a class of all current and former non-exempt Brinker employees who worked at a Brinker-owned restaurant in California from August 16, 2000, to the present – approximately 60,000 employees. The trial court certified the plaintiffs’ proposed classes and subclasses without first resolving certain threshold factual and legal disputes pertaining to the scope of Brinker’s duties to provide meal and rest periods, which are discussed above. The California Court of Appeal reversed the trial court, finding it erred by not first resolving those threshold factual and legal disputes.

As to this procedural aspect of the case, the California Supreme Court disagreed with the Court of Appeal, holding that it is not error per se for a trial court to forego addressing and resolving disputed questions of fact or law prior to certifying a class. To the contrary, very often it will be entirely proper for a trial court to rule on the class certification issue without any consideration whatsoever of threshold factual or legal issues that are in dispute. However, if the propriety of a class certification depends upon the disputed threshold legal and factual questions, then indeed the trial court must consider and resolve those questions. Otherwise, a trial court should generally avoid considering and resolving such disputes when deciding whether to certify a class of plaintiffs.

This decision is important for employers because defendant employers often resist class certification by raising all manner of threshold disputes going to the elements necessary for class certification. To the extent the Brinker decision stands as authority upon which a trial court can rely to avoid addressing such disputes, the opinion may be regarded as somewhat plaintiff-friendly. However, such a perspective is somewhat myopic insofar as sometimes resolution of a dispute through class-action litigation truly is in the best long-term interests of defendants (notwithstanding the short-term cost and inconvenience) because of the added measure of finality and claim preclusion achieved through class litigation.

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D.C. Circuit Enjoins NLRB Notice-Posting Rule

By Vincent T. Norwillo

Yesterday, the United States Court of Appeals for the District of Columbia enjoined the National Labor Relations Board (NLRB) from enforcing its Employee Rights Notice-Posting Rule. Nat’l Ass’n of Mfrs. v. NLRB, (D.C. Cir., No. 12-5068, injunction pending appeal, April 17, 2012). The injunction was issued just days after a federal judge in South Carolina ruled that the NLRB lacked statutory authority to promulgate the rule. Chamber of Commerce v. NLRB, (D.S.C. No.11-cv-2516, April 13, 2012).

The injunction has two significant results: 1) the Notice-Posting Rule will not go into effect on April 30, 2012 as previously scheduled; and 2) the Rule will remain suspended while the Court of Appeals resolves the legal challenges that have been filed in an attempt to rescind the Rule altogether. Accordingly, employers should not post the Notice of Employee Rights required by the Rule, pending further instruction from the Court. Since the Court of Appeals is not even scheduled to hear oral arguments on the legal challenges to the Rule until September, it is unlikely that this issue will be resolved until after November’s presidential election. Of course, GSH will continue to provide updates on any further significant developments on this matter.

The judgment comes on the heels of another favorable result for Jonathan Goins, as on March 26, 2012, an arbitrator entered an interim award of zero dollars and denial of all contract claims on behalf of his client, a reputable sports agency, after a three-day hearing in Chicago, Illinois, involving a dispute over millions of dollars in commission fees with well-known National Basketball Association players for the Miami Heat and Utah Jazz.

A recent decision by the Seventh Circuit Court of Appeals (covering Illinois, Indiana, and Wisconsin) serves as a reminder for employers to review their compensation policies and the manner in which they are applied to ensure that they can demonstrate that any disparities are based on factors permitted by law. The employer in King v. Acosta Sales and Marketing, Inc., 2012 WL 807199 (7th Cir., March 13, 2012), did not make that showing and as a consequence, the Seventh Circuit sent the case back to the lower court for trial.

Susan King was hired by Acosta Sales and Marketing, Inc. (“Acosta Sales” or the “Company”) as a business manager in 2001. Her starting salary was $40,000.01. When she quit six years later, in 2007, her salary was $46,850.23. During her employment, there were 20 business managers, eight of whom were female. All of the men were paid more than all but one of the women. The sole woman who garnered that compensation attained a $60,000 salary after six years on the job while the men exceeded that salary at a faster rate. The Company acknowledged that Ms. King was one of its most successful sales executives, and it ranked Ms. King’s performance on par with a male who was paid almost three times as much as she was paid.

The Equal Pay Act requires the same wages for men and women for equal work on jobs, the performance of which requires equal skill, effort, and responsibility and that are performed under similar working conditions. An exception is permitted where payment is made pursuant to a seniority system, a merit system, a system that measures earnings by quantity or quality production, or a difference based on any other factor other than sex. That exception is permissible, too, under Title VII. An employer asserting this final exception (that the difference is due to any other factor other than gender) bears the burden of persuading the court or jury that it was this factor – and not gender – that was the reason for the pay differential.

Acosta Sales claimed that the difference in pay between Ms. King and her male counterparts was based on education and experience. While the district court accepted this explanation at face value, the Seventh Circuit did not. Instead, it concluded that Acosta Sales had to prove – and not merely assert – that education and experience accounted for the difference. The burden of proof was different under Title VII, but there, too, the Seventh Circuit reversed the district court and concluded that Ms. King had raised sufficient facts to demonstrate that the Company’s explanation may have been false.

The Court acknowledged that starting salaries may indeed be different based on education and experience. However, that should not impact pay increases once the employee is employed. Judge Easterbrook, who authored the decision, stated, “if men arrive at Acosta with higher salaries because of education, but men and women were equally good on the job, women should get more rapid raises after employment and salaries should tend to converge.” But that did not happen at Acosta Sales. To the contrary, the salaries diverged. Ms. King – one of Acosta Sales’ top performers – only received a $7000 increase in her salary over a period of six years. One of her male counterparts received a $14,000 increase in three years. Another male who was hired at Ms. King’s starting salary reached a $60,000 salary within two years. Ms. King’s salary, which never reached $48,000, was thus far less over a much longer period of time than the salaries of her male counterparts. The general manager for Acosta Sales who set the salaries testified that the process to set salaries was subjective, but he did not provide reasons as to why he set any business manager’s salary as he did. Under these circumstances, the Court concluded that a reasonable juror could agree with Ms. King and conclude that the difference was due to sex discrimination.

As this case demonstrates, it is a good idea to periodically review your pay policies to confirm that employees are treated equitably and that differences, if any, are based on factors other than sex. Although employees may start employment at different salaries, salary increases and earnings after the beginning of employment should be based on objective, post-hiring performance measures whenever possible, and employers should be prepared to justify any differences with legitimate, work-related criteria.

When we last left April, our hypothetical employee, she was working while on leave:

April, an exempt employee, goes to the hospital to have her baby. She has already applied for leave under the Family and Medical Leave Act (“FMLA”) and indicated she would like to take the full 12 weeks of leave available to her beginning upon the birth of her child. April’s baby arrives, and six hours later, April is propped up in her hospital bed, answering work e-mails and returning work-related calls. This signals the beginning of a trend for April who, for the rest of her FMLA leave, continues to exchange e-mails and make sporadic telephone calls related to work. Because she has done this work, does the Fair Labor Standards Act (“FLSA”) require that her full salary be continued during what would otherwise be unpaid leave? If you allow her to continue working or ask her for assistance on matters during her leave, are you interfering with her FMLA rights? Can you still count all her time off as FMLA leave?

Last week’s article addressed the FLSA issues that arise from this situation. The second issue presented by an exempt – or a nonexempt – employee working while on leave is when and whether such work “interferes” with the employee’s exercise of FMLA rights.

As many employers are aware, an employer is prohibited from interfering with, restraining, or denying the “exercise [of] or attempt to exercise” any right under the FMLA. 29 U.S.C. § 2615. Thus, if an employer interferes with the FMLA right to medical leave, then the employer has denied the employee a right to which he or she was otherwise entitled and an FMLA violation has occurred. Interference can take the form of discouraging an employee from taking leave or denying leave to which an employee is entitled. 29 C.F.R. § 825.220(b). At some level, requiring an employee who would otherwise be on (and entitled to) continuous leave to work is considered interference. Employers should therefore approach each situation in which an employee is working while on leave with caution and should limit the amount of time and type of work an employee is asked or allowed to perform while on leave. Unlike with the FLSA issues discussed last week, paid leave does not prevent interference. An employer may be found to interfere with an employee who utilizes paid leave while on FMLA because the focus is on the medical need for leave, not whether the time off is paid.

Courts have provided some helpful guidance for when working on leave may be considered interference. Generally, it appears unlikely that an employer will be considered to have interfered with an employee’s right to FMLA leave when the employee is asked to respond to occasional e-mails and take a few phone calls during leave. Courts have held that “[f]ielding occasional calls about one’s job while on leave is a professional courtesy that does not abrogate or interfere with the exercise of an employee’s FMLA rights. When limited to the scope of passing on institutional knowledge to new staff, or providing closure on completed assignments, employers do not violate the FMLA by making such calls.” Reilly v. Revlon, Inc., 620 F. Supp. 2d 524, 537 (S.D.N.Y. 2009). The Reilly court found that if an employer makes a few brief, infrequent phone calls to an employee on leave asking, for example, where files are saved on a computer or where to find certain things, and the employee is not required to produce work product or complete assignments, then the contact is not considered interference with FMLA Leave. Thus, whether or not interference occurred appears to be a practical consideration that looks at the frequency and level of work requested.

It is not entirely clear, however, if an employee must complain to an employer about having to do the work for a request for work to be interference. One court found that an employer has not interfered with an employee’s FMLA leave right when the employee worked on leave without first telling his supervisor that he did not want to work or was too fatigued to do so. Soehner v. Time Warner Cable, Inc., 2009 WL 3855176, 4-5 (S.D. Ohio 2009). However, an employee concerned about job security may not want to object to a request to work while on leave. Out of caution then, employers should consider defining what an employee can and cannot be asked for while on leave. Certainly, the safest practice is to prohibit employees from working on leave entirely. But because that may not be realistic, employers should set, by policy, a procedure for asking employees for work or information while on leave.

In addition, when an employee (such as April) voluntarily works while on leave without the employer’s knowledge or agreement, it is likely that the employer has not interfered with the employee’s exercise of FMLA rights. However, if the employer could or should have known that the employee was working while on leave, then all the issues discussed in this article arise once again, and the employer should take steps to address them.

Suggested leave practices

Employers should consider developing a separate internal operations policy that addresses the following:

1. An employee on leave should not be asked or permitted to do work unless it is requested or performed on a brief, occasional basis for institutional information or is needed as a professional courtesy around a customer or client relationship.

2. Supervisors seeking more from an employee on leave than institutional information on an occasional basis should first inform Human Resources of the need for, and nature of, the proposed request to the employee and receive prior approval to go forward with the request.

3. Working time spent by an employee on leave should be tracked and documented and reported to Human Resources.

4. The policy should define when an employee (exempt or nonexempt) on unpaid leave should be paid for time worked based on time tracked.

April, an exempt employee, goes to the hospital to have her baby. She has already applied for leave under the Family and Medical Leave Act (“FMLA”) and indicated she would like to take the full 12 weeks of leave available to her beginning upon the birth of her child. April’s baby arrives, and six hours later April is propped up in her hospital bed, answering work e-mails and returning work-related calls. This signals the beginning of a trend for April who, for the rest of her FMLA leave, continues to exchange e-mails and make sporadic telephone calls related to work. Because she has done this work, does the Fair Labor Standards Act (“FLSA”) require that her full salary be continued during what would otherwise be unpaid leave? If you allow her to continue working or ask her for assistance on matters during her leave, are you interfering with her FMLA rights? Can you still count all her time off as FMLA leave?

This scenario and these questions are not rare. Clients face these issues frequently as they try to balance concerns over increased governmental scrutiny of their wage and hour practices with the need to move forward in their businesses when vital exempt employees are on leave. Employers are consistently trying to determine how often they can contact exempt employees on leave for key operational information and at which point such contact might mean that the employee is really considered to be at work or that they are interfering with the employee’s leave. Employers also face these issues when employees, such as April, who want or feel the need to work, continue to do varying levels of work while on leave or engage in work communications while on leave, perhaps to help maintain a client or customer relationship.

The wage and hour and FMLA issues presented by the employee who works sporadically during a continuous FMLA leave are not necessarily distinct from those of an exempt employee who is working almost continuously but taking limited intermittent leave. Both scenarios concern issues as to whether full salary must be paid to each individual in order to preserve their exempt status and also what actions might be illegal “interference” with the employee’s FMLA leave rights.

The question of how FMLA leave factors into pay of an exempt employee is answered by the regulations to the FLSA and the text of the FMLA. Generally, employees who are classified as exempt executives, administrators, and professionals under the FLSA must be paid on a “salary basis.” To meet the salary basis criterion, an exempt employee must receive a fixed salary each workweek, which may not fluctuate regardless of the number of hours worked. Deductions from the fixed salary are permissible in certain instances, however, including when the employee takes FMLA leave:

An employer is not required to pay the full salary for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act. Rather, when an exempt employee takes unpaid leave under the Family and Medical Leave Act, an employer may pay a proportionate part of the full salary for time actually worked. For example, if an employee who normally works 40 hours per week uses four hours of unpaid leave under the Family and Medical Leave Act, the employer could deduct 10 percent of the employee’s normal salary that week.

29 C.F.R. § 541.602(b)(7) (Emphasis added.) This exception is also contained in the FMLA statute itself at 29 U.S.C. § 2612(c):

Where an employee is otherwise exempt under regulations issued by the Secretary [of Labor]…the compliance of an employer with this subchapter by providing unpaid leave shall not affect the exempt status of the employee…

Under both laws, an exempt employee’s weekly salary can be prorated to reflect unpaid FMLA leave taken in that week. If an exempt employee normally works a 40-hour week and is taking one unpaid day off each week, the employer can reduce the salary paid in those weeks to 4/5ths (or 80%) of his usual salary. (Of course, if the employee is using available paid leave during an FMLA absence, there would be no deviation in the employee’s salary.) In April’s scenario, April’s employer needs to calculate how much time she spends working while on FMLA. If April is just answering sporadic telephone calls or occasionally sending brief e-mail responses, the time spent working may not be significant enough to generate a need to pay her a proportionate amount of her salary. However, if it is clear that April is spending hours and not minutes working during her leave, she may be entitled to a portion of her salary proportionate to the time she has actually worked.

Yet, even knowing this, employers face the practical problem of monitoring how much time an employee is working while ostensibly on continuous leave. This accounting may be best approached by having a policy that addresses working on leave. For example, an FMLA policy could prohibit any type of work being performed while on unpaid leave without the express written authorization of an employee’s supervisor and Human Resources. The policy would further set out a requirement for the employee to account weekly for any time spent doing work, including a description of the work done and the time spent. Again, if the employee on FMLA is utilizing available paid leave, and the salary is automatically continued, this FLSA issue is not presented.

Aside from the potential issues under the FLSA, could asking or permitting an employee to perform work while on FMLA leave be considered illegal interference with the leave? That issue, as well as some ways employers can address these issues through internal policies, will be discussed in next week’s article. Stay tuned.

For many employers, having employees telecommute from home is standard practice. But what if your company only has one telecommuting employee in a particular state, and your company otherwise has no ties to that state whatsoever? Must you still file a corporate business tax return in that state? If that state is New Jersey, a recent court decision clarifies that the answer is a resounding “Yes.”

On March 2, 2012, in a case of first impression, the Superior Court of New Jersey, Appellate Division, issued an opinion that will impact any out-of-state corporation that has employees who, on a full-time basis, telecommute from New Jersey. In Telebright Corporation, Inc. v. Director, New Jersey Division of Taxation, 2012 WL 669964, the Appellate Division held that if a corporation has even one employee telecommuting from New Jersey on a full-time basis, then that out-of-state corporation is subject to New Jersey’s Corporation Business Tax and must file a corporation business tax return.

Telebright Corporation is a Delaware corporation, with its principal place of business in Maryland. In 2004, a Telebright employee moved from Maryland to New Jersey after her husband obtained employment in New Jersey. To keep the services of the employee, who was a developer and writer of software code, Telebright permitted the employee to telecommute from her home in New Jersey on a full-time basis. From the time the employee began working from New Jersey in 2004, Telebright had withheld New Jersey income tax from the employee’s salary and remitted it to the New Jersey Division of Taxation.

In October 2006, in response to the New Jersey Department of Taxation’s inquiry into Telebright’s connections with New Jersey, Telebright responded that it had one full-time employee working from her home since 2004. The Division of Taxation then informed Telebright that it was required to file New Jersey Corporation Business Tax returns for the period beginning January 2004.

In 2008, the Division of Taxation reached a final determination and found that Telebright was subject to New Jersey’s corporate business tax because Telebright was doing business in New Jersey by having an employee telecommute from the state. Telebright challenged the final determination, arguing that it was not doing business in New Jersey and that applying New Jersey’s Corporation Business Tax to it based on the presence of one telecommuting employee would violate the Due Process and Commerce Clauses of the United States Constitution.

The Tax Court framed the issue as “whether a Delaware corporation with offices in Maryland is subject to the New Jersey Corporation Business Tax Act . . . by virtue of the fact that a New Jersey resident employed by the company ‘telecommutes’ by receiving and performing her assignments each business day at her New Jersey home via computer and telephone.” Telebright Corporation, Inc. v. Director, Division of Taxation, 25 N.J.Tax 333, 339 (2010). The Tax Court held that “a foreign corporation that regularly and consistently permits its employee to work each business day at a New Jersey residence is doing business in this State and must file Corporation Business Tax returns.” Id. at 340. The Tax Court further concluded that the imposition of corporate business tax on a foreign corporation in these circumstances did not violate the Due Process and Commerce Clauses of the United States Constitution.

The Superior Court of the State of New Jersey, Appellate Division, affirmed the Tax Court’s decision on March 2, 2012. The Appellate Division agreed that Telebright was subject to New Jersey’s Corporation Business Tax because Telebright was, in fact, doing business in New Jersey by virtue of the one telecommuting, full-time employee. The Appellate Division also held that, given the particular circumstances of the case, subjecting Telebright to the New Jersey Corporation Business Tax would not violate either the Due Process or Commerce Clauses. In discussing the Commerce Clause argument, the court noted that because the employee was “producing a portion of [Telebright's] web-based product [in New Jersey] . . . [Telebright] benefits from all of the protections New Jersey Law affords [the] employee,” and that the minimal effort associated with calculating and remitting the corporate business tax would not amount to an undue burden on Telebright’s conduct of interstate commerce.

In light of the Appellate Division’s holding in Telebright, any out-of-state corporation that has at least one full-time, telecommuting employee based in New Jersey should be aware that the presence of that employee in the state triggers the corporation’s obligation to file a New Jersey Corporation Business Tax return and pay New Jersey’s Corporate Business Tax.

Perhaps in recognition of the increased diligence by employers and employment attorneys in preventing and defending against discrimination and harassment claims, a different (but hardly new) claim has begun appearing in an increasing number of employee complaints: retaliation for having opposed discrimination in the workplace.

Claims for retaliation in the workplace have expanded dramatically during the last few years. A record number of retaliation claims were filed with the Equal Employment Opportunity Commission (EEOC) in 2011, roughly 50% more than in 2006. Since 1997, the number of retaliation claims filed with the EEOC has more than doubled.

The popularity of retaliation claims is likely due to a host of factors. Such claims present particular challenges because once an employee complains of discrimination every subsequent employment action is given particular scrutiny. In addition, retaliation claims are broad, allowing employees who are otherwise outside of a protected category to find protection under discrimination laws. For example, a male employee under the age of 40 could claim that he was retaliated against for having opposed gender and age discrimination against a female coworker who is over the age of 40. Finally, such claims often present a fallback argument for employees when their other discrimination claims fail. An employee claiming illegal discrimination can also claim retaliation for having opposed this discriminatory treatment in the first place. The employer could prove that there was no discrimination but could still lose on the retaliation grounds.

In light of the increasing number of retaliation claims, it is helpful to review the nature of retaliation claims and how employers can help avert legal liability, for retaliation differs from discrimination or harassment claims in many key respects.

What is Unlawful “Retaliation”?

Most state and federal laws, and the courts interpreting those laws, define retaliation as an “adverse action” taken against an employee because he or she engaged in a “protected activity.” An adverse action could be anything from a reduction in pay or reassignment of job duties to termination of employment. “Protected activity” can include complaining that an employer has violated the law, participating in an investigation, filing a complaint with a government agency, or even requesting a protected leave of absence or reasonable accommodation. Of particular concern is the protection for simply complaining about alleged violations, because most courts have held that there are no “magic words” that must be uttered, so long as the employee can show that the words used would have alerted the employer to the fact that he or she was opposing illegal conduct.

The Danger

Retaliation claims are dangerous for several reasons. The claims can be viable even when the alleged discriminatory conduct in question does not constitute unlawful harassment or discrimination. As long as the employee has a reasonable and good faith belief that he is complaining of illegal conduct, he is engaging in protected activity.

Additionally, the burden of proof may make it difficult to defeat a retaliation claim without a trial. The employer’s burden is especially difficult when the adverse employment action follows alleged protected conduct and there is insufficient documentation to support an argument that the adverse action was justified and non-retaliatory. Without such documentation, it becomes a case of “he said, she said,” which will often find its way to trial to resolve the credibility dispute. Of course, jury trials are extremely expensive, resulting in tens of thousands of dollars in legal fees and risking a loss that can easily reach six figures.

Minimizing Risk

The good news is that employers can minimize risk of retaliation claims by being proactive. To begin, employers should institute formal anti-retaliation policies and procedures to address complaints, and employees should be aware that complaints will be addressed and that there will be no retaliation for filing complaints. Consider having the policies specifically address the steps the employer will take to investigate the complaint, how long the investigation should take, the method of response to the employee concerning their complaint, and a procedure to monitor any possible adverse employment actions following the initial complaint. Often times, complaints are alleged to have been verbal or even a fairly innocuous comment in an e-mail made to a supervisor or manager. Supervisors and managers, who are the front-line defenders against retaliation claims, should be trained to respond to complaints so that the employer can in turn respond appropriately. Managers and supervisors must also be aware that retaliatory conduct is prohibited and that they can face consequences for violating the anti-retaliation policy.

Policies that provide clear channels for reporting suspected discrimination or alleged harassment, such as contact information for human resources, is another best practice that can help avoid future liability. An employee’s failure to report a complaint as directed under such a policy may help the employer to defend against future claims of retaliation.

If there has been opposition to alleged discrimination, employers must be vigilant to ensure that any subsequent adverse actions are unrelated to the employee’s complaints. The best way to demonstrate that an adverse action was legitimate is to document poor performance and enforce policies consistently and contemporaneously to the employee’s performance, not merely after an employee makes a complaint. No matter how legitimate and real performance issues are, post-complaint documentation can look a lot like retaliation to a judge or jury.

Of course, those employees who oppose alleged discrimination are not immunized from discipline or termination decisions by their employers. However, the scrutiny placed on the employer’s actions is significantly greater than with other employment discrimination claims. Be certain the evidence justifying termination is well-documented and verifiable before taking adverse action against employees who complain, participate in, or are closely associated with employees who raise legal complaints in the workplace (such as by a family member or spouse). Defensible disciplinary actions are supported by well-developed documentation that follows the employer’s procedures, precedents, and practices, leaving no question about the employer’s legitimate business-related motivation in taking the action.

It seems almost inevitable that employees with Internet access via work-issued computers will use that access for personal reasons at some point during the work day. One of the most common things that employees do is log into their personal e-mail accounts to read and send e-mails. But have you expressly informed your employees through your employee handbook or company’s website about your e-mail policy? Better yet, does your company even have an e-mail policy, and if so, does it address employees’ personal e-mail accounts?

Although employees using work time to send personal e-mails is nothing new, the issue has taken on a new importance for employers and the courts because a number of employers have attempted to discover employee’s personal e-mails in litigation on the theory that e-mails made on work-issued computers and via company-provided Internet access are not private or confidential. But as with all developing areas of law, the courts have grappled with these questions of confidentiality and have come to different results. On one end of the spectrum, courts have held an employee communicating via e-mail on a work computer and via work-provided Internet access could destroy the confidentiality of the communication. On the other end, other courts have held that if the employee has a reasonable expectation that the communication would remain confidential, and takes measures to maintain the privilege, the communication remains privileged.

Although this area of law is still developing, some courts have set forth guidelines for determining whether such employee communications remain private. For example, a federal court in the Southern District of New York developed a four-factor test to evaluate claims of privilege for e-mails sent from or through an employer device or system:

1.  Does the employer maintain an e-mail policy banning personal or other objectionable use?

2.  Does the employer monitor the use of the employee’s computer or e-mail?

3.  Do third parties have a right to access the computer or e-mails?

4.  Did the employer notify the employee, or was the employee aware of the use and monitoring policies?

The most determinative of these factors was whether the employee was using a work e-mail account, or a password-protected personal e-mail account.

Some courts have held that employees have a reasonable expectation of privacy with respect to e-mails sent to or from an attorney via a personal e-mail account, such as a Yahoo!, Hotmail, or Gmail account, from a work computer. In one case, Strengart v. Loving Care Agency, Inc., 201 NJ 300 (2010), an employer sought to gain access to e-mails sent by a (soon to be) former employee who communicated with her attorney about suing her (then) employer. Her e-mails were sent from her personal e-mail account, but on her company-issued computer and via the company’s provided Internet access. Ultimately, the New Jersey Supreme Court held that the communications were confidential and privileged, in large part because the company’s computer policy did not expressly reference personal e-mail accounts, and thus the employee did not have express notice that the e-mails sent or received from her personal account were subject to monitoring.

Conversely, other courts have held that privilege did not exist. A federal district court in New York, for example, in In re Reserve Fund Securities and Derivative Litigation, 2011 WL 2039758 (S.D.N.Y. May 23, 2011), held that although the communication between a husband and wife would normally be protected by what courts refer to as the “marital privilege,” because the husband’s e-mails to his wife were stored on the company server and sent using a company computer over the company e-mail system, the court deemed that the husband had waived the marital privilege. In that case, the SEC sought production of a series of e-mails sent between the Vice President of the Reserve Management Company and his wife in the two days following Lehman Brother’s declaration of bankruptcy. The company’s e-mail policy expressly prohibited employees from using any e-mail account other than the company’s while on the company premises and provided that employees “should limit their use of the e-mail resources to official business.” The policy also instructed that if employees receive personal e-mails to their work e-mail account, they should delete and remove them regularly. Based on the policy, the court held it was clear that the employee should not have had an expectation of privacy for any e-mail communications. Thus, the communications were not privileged.

In light of the division among the courts regarding whether employee communications sent from a work issued device are privileged or not, employers should take the following into consideration:

• Consider providing your employees with a written e-mail policy that expressly states the company’s position on personal e-mails being sent while at work;
• Weigh the pros and cons of prohibiting all access to personal e-mail accounts or whether some use will be permitted. Consider the practical effect on employee morale of any policy that either outrightly prohibits personal e-mail access or states that employees are to have no expectation of privacy in personal communications made from a company-issued electronic device;
• If your computer server can and/or does capture employee e-mails sent from personal e-mail accounts, consider giving employees express notice of this;
• When drafting an e-mail policy, keep in mind that the more explicitly you put your employee on notice that personal e-mails, or even use of work-issued computers to access one’s personal account, may not be private, the more likely it is that a court will find that the employee had no expectation of privacy or confidentiality. Conversely, the more security/privacy you give your employees regarding their work-related e-mail (e.g. password protection), the more likely it is that a court will find a reasonable expectation of privacy. If the employer has a policy which prohibits the use of their computers for personal matters, the privilege may be deemed to be waived; and
• When drafting an e-mail policy, keep in mind that courts will hold companies accountable to their policies and may rely heavily on the representations made (or what is omitted) when determining such things as whether an employee had notice their personal e-mails would be monitored or an expectation of privacy was created. For instance, if the policy provides for some allowance of personal use of company-issued electronic devices, courts will more likely presume that the given communication at issue was permissible, or at least consistent with the e-mail policy.

Employers should realize, however, that courts are evaluating these issues on a case-by-case basis. Thus, no matter how well-drafted an electronic communications policy may be, there is no guarantee that it will provide an employer access to an employee’s personal communications in litigation. However, providing employees clear guidance as to which communications are considered by the employer to be private will at least place a company on firmer ground when arguing that a particular e-mail should be discoverable in ligitation or admitted into evidence at a proceeding. Further, it puts employees sufficiently on notice, so that they can take appropriate measures to protect their privacy and thus avoid the issue altogether.

In the past few years, we have seen an increase in the number of client inquiries regarding social media policies, and for good reason – employers want to update and implement policies to protect their interests and to address the increasing use of social media by their employees. In particular, there has been an uptick in interest in these policies as employers are noticing an increased number of legal cases and actions applying the National Labor Relations Act (NLRA) – a law enacted nearly 70 years before the launch of Facebook – both to companies’ social media policies and to companies’ disciplinary actions against employees for posts and comments made on social networking sites.

Last month, the Office of the General Counsel of the National Labor Relations Board (“Board”) released its second report discussing social media, and it provides additional guidance on what social media policy provisions the Board considers to be overbroad, as well as some guidance on when employee actions on social networking sites become protected by the NLRA. The Board’s decisions may require many employers to revisit their social media policies and update them accordingly.

As background, many, if not most, employers are familiar with the general principles of the NLRA. But what can be easy to forget is that certain provisions of the NLRA apply to all employers, regardless of the presence of a unionized workforce. In terms of social media policies, the key provisions of the NLRA are Sections 7 and 8(a)(1). Section 7 concerns the associational rights of all employees and provides that all employees have the right to engage in certain “concerted activities,” which the Board considers to include discussing wages and terms and conditions of employment. Section 8(a)(1) prohibits, in general, workplace rules that employees would reasonably construe to prohibit activities protected by Section 7.

Based on recent cases applying the NLRA to employer social media policies and employee social media activities, a couple general principles become evident. First, the airing of purely personal grievances not made in relation to group activity among employees generally is not protected by the NLRA. Unfortunately for employers, the Board appears to make the determination of whether a social media post, such as a blog, a Facebook update, or tweet on Twitter, is a personal airing of a grievance as opposed to a group activity based on whether, and in what manner, coworkers respond to that post. Thus, it appears that a social media post that, in and of itself, may be considered personal in nature can subsequently turn into concerted activity protected under the NLRA. This, of course, can complicate any action an employer seeks to take based on that initial post.

Next, although the decisions by the Board do not offer affirmative guidance on how employers can draft enforceable social media policies, the decisions do provide examples regarding what the Board seems to consider overly broad policy provisions that violate the NLRA. In general, broadly worded social media policies lacking in contextual examples will likely be considered overbroad and in violation of Section 7 and/or Section 8(a)(1). The Board has found the following social media policy provisions, on their own and without context, to be overbroad and in violation of the NLRA:

• General prohibition on “inappropriate conversations” or “inappropriately” sharing “confidential information” related to the employer’s business, including personnel actions;
• Blanket prohibition on “unprofessional communications” that could “negatively impact” the “reputation” of the employer;
• General prohibition on disclosing or communicating information of a “confidential,” “sensitive,” or “non-public” nature concerning the employer;
• Prohibition on using or displaying the employer’s name or symbol without prior permission;
• Requirement that employees state with each post that any opinions expressed are their own and not those of the employer;
• Requirement that employees discuss “work-related concerns” with management before expressing them online;
• Prohibition on making any disparaging remarks about coworkers and supervisors;
• Prohibition on “offensive conduct”;
• Prohibition on use of social media that may violate, compromise, or disregard the rights and reasonable privacy of any person or entity; and
• Prohibition on posts the employees would not want their supervisor to see.

The key problem with these general prohibitions, according to the Board, is that, without context, employees will reasonably construe them to prohibit otherwise protected activities. For example, “confidential” or “non-public” information could include wage information, and “inappropriate” comments or posts could include grievances about supervisors or company management.

It is for these reasons that those policies found permissible by the Board provided additional context or were more specifically tailored to the employer’s business. Thus, while a general prohibition on “inappropriate” comments may not be permissible, a prohibition on posts or comments regarding coworkers or supervisors that are vulgar, obscene, threatening, intimidating, harassing, or a violation of workplace policies against discrimination or harassment based on protected classes is more likely to be permissible. Similarly, the Board has found permissible policies that allow employers to ask employees to remove posts or comments if the employer reasonably believes it necessary to ensure compliance with securities regulations or other laws. Likewise, the Board found permissible a policy that prevented employees from posting confidential medical information about customers or disclosing “embargoed” information, such as product launch dates or the date of an impending organization.

Unfortunately, the Board found in one case that a savings clause stating the employer’s social media policy “would not be interpreted or applied so as to interfere with employee rights to self-organize, form, join, or assist labor organizations, to bargain collectively through representatives of their choosing, or to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, or to refrain from engaging in such activities” was not enough to cure the ambiguities otherwise present in the policy.

Where does this leave employers? As an initial matter, employers should revisit their social media policies and revise them if necessary. Employers should be wary of broad, sweeping prohibitions without some context or specificity related to the employer’s business. While a savings clause may not save an otherwise overbroad policy, it may still be beneficial to include. Finally, employers should keep the NLRA in mind when deciding whether to take an employment action against an employee for his or her online comment. It may seem as though social media has been around a while, but as the Board’s cases demonstrate, this is still a developing area of law, and employers should expect more changes in the future.

Many, if not most, human resources personnel and in-house counsel, along with supervisors and managers who deal with employee requests for accommodations or work restrictions, have long realized the value and importance of written job descriptions. When determining whether an employee can perform the essential functions of a particular job, having a written job description does not just make for a compelling exhibit at a hearing or trial – it can make the difference between winning and losing a lawsuit. Written job descriptions are likely to become even more important in defending against a disability claim in light of the ADA Amendments Act of 2008, effective January 1, 2009, which expanded the class of individuals entitled to protection under the Americans with Disabilities Act (ADA).

Because plaintiffs can more readily establish the existence of a disability under the amended ADA, more cases will likely hinge on whether the plaintiff was qualified to perform the essential functions of his or her job. To show that he or she was qualified to perform a particular job, an employee or applicant must be able to demonstrate that he or she had the requisite skill, experience, education, and other job-related requirements for the position and would have been able to perform the essential functions of the position with or without reasonable accommodation.

This is where a written job description comes into play. Take, for example, the case Richardson v. Friendly Ice Cream, 594 F.3d 69 (1st Cir. 2010). Katharine Richardson held the position of assistant manager at a Friendly’s location in Ellsworth, Maine. Several years into her employment, she developed shoulder impingement syndrome, which caused her pain when she operated the grill or scooped ice cream. At first, her job duties were modified, and later Richardson went out on leave to undergo surgery.

After her FMLA leave was exhausted, Richardson attempted to return to work. Her doctor issued her a work release that prohibited her from performing repetitive activity with her right arm and lifting objects weighing more than five pounds. Friendly’s, however, did not allow her to return to work and terminated her employment.

In her subsequent lawsuit, Richardson claimed that her sole essential job function was to oversee the operation of the restaurant and ensure that it ran smoothly. Friendly’s disagreed, arguing that the essential functions of her assistant manager position required her to be able to perform manual tasks, such as assisting in food preparation, delivering food to customers, and performing general housekeeping duties. In doing so, it relied heavily on a six-page job description.

The job description was divided into multiple sections. Under a section titled “Essential Functions,” thirteen general categories of job duties were listed, among which were that an assistant manager must be able to run shifts and direct and assist in the kitchen. Under a section labeled “Task Analysis,” duties included physically assisting and performing kitchen, dining, and take-out operations; cooking food items on a grill; delivering prepared meals, beverages, and dessert items to customers; cleaning and resetting tables; loading and operating the dishwasher; and performing general housekeeping duties.

The district court agreed with Friendly’s that the assistant manager position had a substantial physical component and granted summary judgment in favor of Friendly’s. The First Circuit (covering Massachusetts, Maine, New Hampshire, Puerto Rico, and Rhode Island) affirmed. Had Friendly’s not had a detailed and accurate job description, the case may have come out differently.

Unfortunately, if a company does not have any job descriptions for the position at issue, it may be more difficult to establish the essential functions of the plaintiff’s job. Even though the plaintiff always has the ultimate burden of proving that he or she is a qualified individual, it is the employer’s burden to come forward with some evidence that a particular function is essential.

When drafting the essential function portion of the job description, companies may want to keep the following in mind:

• Include the approximate amount of time the employee will spend on the job performing certain functions. An employee will have a much harder time establishing that a task is a minor one or could be passed off to other employees if it requires a significant portion of the employee’s work day.
• If a position requires repetitive motions, use the word “repetitive.”
• Be specific regarding lifting and other physical requirements. A general statement like “must be capable of some heavy lifting” will not resonate as convincingly as a description that specifies the exact amount of weight that an employee must be able to lift. In Anderson v. Embarq/Sprint, 379 F. App’x 924, 928 (11th Cir. 2010), an employer prevailed on summary judgment, in part, because the job description specifically required that employees in the distribution center (where the plaintiff worked) had to be able to frequently and continuously carry boxes that weighed up to 70 pounds.
• Human resources should work with front-line supervisors to ensure that the job description accurately reflects the actual tasks being performed. An inaccurate job description may be worse than having no job description at all.
• As always, update, update, update. Job duties can naturally evolve over time, as business needs change, production increases or decreases, and new technology is implemented. The job description should accurately reflect the duties being performed now, not those performed several years ago.

Having complete and thorough job descriptions may be the key to defending against disability litigation. Employers are encouraged to make this task a priority, because the relatively small investment of time and resources now could pay dividends in the form of avoided liability in the long run.

Most employment attorneys and even many non-attorneys who deal with employment law frequently are familiar with the McDonnell-Douglas burden-shifting framework, which has formed the basis for employment discrimination litigation for nearly 40 years. But a recent Seventh Circuit decision serves as a reminder that despite the prevalence of the McDonnell-Douglas framework in our minds, especially when it comes to “similarly situated” employees, it does not serve as a replacement for consistent enforcement of company policy in the first place.

As set out in Coleman v. Donahoe, 2012 WL 32062, Case No. 10-3694 (Jan. 6, 2012), Denise Coleman began working as a mail processing clerk for the Postal Service in 1974. Once manager William Sove selected William Berry to become Coleman’s supervisor in 2005, Coleman alleged that the two men began discriminating against her, and, on more than one occasion, she threatened to file a Charge of Discrimination with the Equal Employment Opportunity Commission (“EEOC”). A few months after Berry became her supervisor, Coleman checked herself into the psychiatric unit of a hospital, complaining of depression, anxiety, and insomnia. At some point during her stay, she admitted to having homicidal thoughts towards Berry. Coleman was eventually discharged from the hospital, with her doctor describing her as a “model patient” in “stable condition.”

On the day of Coleman’s discharge, her doctor contacted Berry to let him know that Coleman had, early in her treatment, expressed threats to his life. Berry immediately relayed this information to Sove and another manager, Charles Von Rhein, who collectively decided to place Coleman on “emergency off-duty status” without pay, during which time Coleman filed two Charges of Discrimination with the EEOC, alleging race, gender, and disability discrimination, as well as retaliation. The Postal Service conducted an internal investigation of the situation, which included a conversation between Von Rhein and Coleman during which Coleman confirmed having homicidal thoughts about Berry but indicated that she was continuing in outpatient therapy, stable, and ready to return to work. The Postal Service, however, decided to terminate Coleman’s employment. Both Von Rhein and Sove signed the Notice of Removal, which stated that by having voiced her threats towards Berry, Coleman had violated the Postal Service’s company-wide “no tolerance” ban on violent and/or threatening behavior.

Although she was eventually reinstated by an arbitrator, Coleman continued to pursue her discrimination claims in the United States District Court for the Northern District of Illinois. When the Postal Service moved for summary judgment, Coleman presented evidence of two white, male Postal Service employees who held a knife to the throat of a black co-worker while holding down his legs. Both of these employees received only a week-long suspension after Von Rhein and the employees’ supervisor, Brian Turkovich, investigated the incident and concluded that it was merely “horseplay.” The district court granted summary judgment in favor of the Postal Service, finding that these employees did not qualify as comparators for Coleman because they reported to a different direct supervisor than Coleman and held substantially different jobs than Coleman. The district court further stated that there was no evidence of pretext with regard to the Postal Service’s proffered non-discriminatory reason for terminating Coleman, namely her violation of the “no tolerance” policy.

On appeal, the Seventh Circuit reversed, and in doing so presented a number of good reminders regarding employment discrimination claims:

Pay attention to who the ultimate decision-maker is. The district court found the two white co-workers were not similarly situated to Coleman because their direct supervisor was Turkovich, while Coleman’s was Berry. However, the Seventh Circuit pointed out that there was a common investigator and ultimate decision-maker with regard to all three individuals – Von Rhein. Indeed, Von Rhein had both investigated, and approved of, Coleman’s termination, as well as the suspension of the two white male employees. As such, the three did deal with the same decision-maker, which the court found determinative, at least at this stage of litigation.

Enforce company-wide policies consistently regardless of job title and duties. The district court found that the two white co-workers were not suitable comparables because they held different job titles and duties than Coleman. However, the Seventh Circuit made it clear that such things were not necessarily controlling in a case like this, which deals with disciplinary decisions based on a workplace rule that applies to all employees. The Court noted that in cases involving the quality of job performance, a difference between a plaintiff’s and comparators’ positions can be important because it can often, by itself, account for the less favorable treatment of the plaintiff. The Court further noted that this was a case involving individuals who were disciplined for violating a general workplace rule – a ban on violent/threatening behavior – that applied to all employees regardless of department or rank. Thus, their job titles and duties were not controlling to the analysis. Here, there appeared to be inconsistent enforcement of a company-wide policy by the same decision-maker, which ultimately contributed to the Seventh Circuit’s decision to reverse.

Zero tolerance means zero tolerance. The Seventh Circuit reminded us that “comparable seriousness” in employment cases does not mean identical conduct. Here the court found that directly threatening another employee with a knife in the workplace seemed, at least for purposes of summary judgment, at least as serious – and arguably more so – as Coleman’s indirect “threat” against Berry, which was potentially not even a threat considering the context in which it was made. Yet, although both acts violated the Postal Service’s “zero tolerance” policy, the Postal Service applied the policy differently, terminating one employee while dismissing dangerous acts of others as mere “horseplay” and thus not covered by the policy. While disciplinary discretion is generally a good thing for employers to maintain, it can, as shown here, sometimes cause problems, especially when the policy in question is described as “zero tolerance.” As always, consistency is paramount.

In sum, while the McDonnell-Douglas framework remains a tried-and-true analysis, the Coleman case is a good reminder that real prevention of legal liability rests not in any legal framework, but in the actions of supervisors and other company personnel before litigation even begins. A zero-tolerance policy is a useful tool, but only if it is enforced in a consistent manner. There can be a natural tendency to treat employees differently based on job title or perhaps even “super star” status, but as Coleman demonstrates, when it comes to general workplace policies, employers do so at their own peril.

Instead of wishing you an early Happy Valentine’s Day, I want to wish you a belated Happy Singles Week! A little known fact is that National Single and Unmarried Americans Week occurred in September 2011. According to a New York Times article written by Tara Parker-Pope, about 100 million Americans – nearly half of all adults – are unmarried. Why is this important? According to Ms. Pope, “the plight of the American single person is cause for growing concern.” She notes that often, single adults are overlooked by policies that favor married couples, from family-leave laws to lower insurance rates.

Ms. Pope raises an interesting point. The “single vs. married” battle has been simmering for some time. Time and time again, singles have argued that married individuals want special treatment for their life choices. Reactions to EEOC v. Bloomberg, L.P., 778 F. Supp. 2d 458 (S.D.N.Y. 2011) make this point clear. In Bloomberg, the EEOC alleged, among other charges, that Bloomberg, the financial and media service giant founded by New York City Mayor Michael Bloomberg, systematically reduced the pay of, demoted, or intentionally excluded mothers and pregnant women from management meetings or otherwise isolated them. Chief U.S. District Judge Loretta Preska dismissed the EEOC’s claims of pattern or practice discrimination, stating that the company’s regular practice was to treat women who took maternity leave the same as others who took similar amounts of leave for non-pregnancy related reasons and that, legally, Bloomberg acted within the scope of what the law required. Judge Preska also commented on the EEOC’s notion of the need for a “work-life balance.” She wrote, in relevant part, as follows:

At bottom, the EEOC’s theory of this case is about so-called “work-life balance.” Absent evidence of a pattern of discriminatory conduct . . . the EEOC’s pattern or practice claim does not demonstrate a policy of discrimination at Bloomberg. It amounts to a judgment that Bloomberg, as a company policy, does not provide its employee-mothers with a sufficient work-life balance. There is considerable social debate and concern about this issue. Former General Electric CEO Jack Welch stated, “There’s no such thing as work-life balance. There are work-life choices, and you make them, and they have consequences.” . . . But it is not the Court’s role to engage in policy debates or choose the outcome it thinks is best. It is to apply the law. The law does not mandate “work-life balance.” It does not require companies to ignore employees’ work-family tradeoffs – and they are tradeoffs – when deciding about employee pay and promotions. It does not require that companies treat pregnant women and mothers better or more leniently than others. All of these things may be desirable, they may make business sense, and they may be “forward thinking.” But they are not required by law. The law simply requires fair treatment of all employees. It requires holding employees to the same standards.

Not all agreed with Judge Preska’s decision. Janine D’Arcy, whose “On Parenting” blog can be read on the Washington Post, wrote that Judge Preska had “dropped an anvil on the work-life balance scale” and had “smacked down any notion that workers might expect their employers to honor their family-life decisions.”

To whose choices is Ms. D’Arcy referring? Do married individuals with children expect favorable treatment? Should being up late all night with a sick child be an excuse to get out of a deadline? What about a person who is caring for a sick friend? Should they not get the same treatment? Government policies seem to favor those who are married and who have children. For instance, the federal Family and Medical Leave Act allows individuals to take leave to care for an immediate family member (spouse, child, or parent) with a serious health condition. The Act does not permit leave for a niece, nephew or a close friend.

This is something for employers to consider in the workforce. Is there a battle waging between the married workers and the single workers that negatively impacts morale? Are company policies favoring married workers? One way to combat any sort of bias may be for your company to review its leave policies. Should your company have a sick leave policy that permits employees to have time off in the event their child or spouse is sick, you may want to think about ensuring that an unmarried employee can use leave to care for a sick friend or niece. In other words, provide a few personal days to all employees that can be used for any reason whatsoever. If funeral leave is permitted for a family member, perhaps revise the existing policy to permit funeral leave for a personal friend.

The workforce is never going to be free from the “work-life balance” debate. As employers, the best we can hope to achieve is to embrace each employee’s individuality and life choices, ensuring that each employee feels valued.

With relatively little fanfare, the Equal Employment Opportunity Commission recently posted its Draft Strategic Plan for Fiscal Years 2012-2016. The plan, which is required every four fiscal years from each government department, both reflects the current economic climate and provides some insight into where the EEOC will focus its efforts in upcoming years. Indeed, the plan acknowledges what many employers and employment attorneys have been saying for years – that during an economic downturn comes “an increase in overall charges [of discrimination] as more people are laid-off.” Indeed, in 2010 and 2011 each, the EEOC received just shy of 100,000 individual private sector charges of discrimination, including a record 99,947 individual charges in 2011. Against this influx of charges, Congress recently cut the EEOC’s budget for the upcoming fiscal year – something the Commission does not expect to change anytime soon. The new plan assumes that the EEOC’s funding will remain at its 2012 levels through 2016.

The four-year fiscal plan calls for replacing the EEOC’s 2006 National Enforcement Plan with a new Strategic Enforcement Plan, which will be finalized and adopted in September 2012. Under the new plan, the EEOC will focus its efforts – and its litigation – on “systemic discrimination cases,” which the EEOC considers “pattern or practice, policy, and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic area.” Indeed, under the new Strategic Enforcement Plan, the EEOC will have a target each fiscal year for a certain, still undetermined, percentage of its litigation cases to be systemic cases.

Also notable for employers is the EEOC’s indication that it intends to blur the lines between its investigatory and litigation arms. The EEOC intends to create an “integrated, holistic approach to enforcement from beginning to end, without separating the investigation and conciliation state of the EEOC’s work from its litigation stage.” What this means for employers is still unclear, but it would not be unexpected to see more document and information requests from the EEOC at the investigative stage. Also of note is that the EEOC intends to focus on “targeted, equitable relief” that would expand the sought-after relief beyond just the individual complaining of discrimination to “all employees and job-seekers.” Although the phrase “targeted, equitable relief” will be further defined later this year, the EEOC indicates that it will include more requests for supervisor and employee training, development of policies and practices by employers, and additional external monitoring.

The proposed four-year plan also sets two other goals for the EEOC. First, the EEOC wants to increase its education and outreach program to reach those groups it considers to have not been “equitably served” by the EEOC, such as “persons of color under the age of 30, low-skilled workers, and new immigrants.” To do this, the EEOC plans to increase, among other things, its Internet and social media presence. Second, the EEOC intends to create more internal efficiency to provide greater customer service.

Although the plan is valuable for providing insight into the future direction of the EEOC, it should be noted that there are a number of factors that could significantly alter these objectives (a fact that the EEOC acknowledges in its plan). As recent years have shown, changes in the economy directly affect the EEOC’s budget, which in turn affects, among other things, the number of investigators and attorneys the EEOC can employ. Additionally, changes in the law, such as 2008′s Genetic Information Non-Discrimination Act of 2008, can change the scope and reach of the EEOC. Finally, and perhaps most importantly in an election year, politics can affect the EEOC’s plans, especially if control of either of the Houses of Congress or the White House change parties. Thus, while the recently published draft strategic plan offers valuable insights into the direction of the EEOC, only time will tell whether any of its goals ultimately come to fruition.

A recent decision by the National Labor Relations Board (“Board”) demonstrates that in law, as in life, sometimes you cannot change your mind without consequences. In Douglas Autotech Corp., 357 N.L.R.B. No. 111 (Nov. 18, 2011), the Board affirmed the administrative law judge’s (“ALJ”) decision that, even though employees participated in an illegal strike, their employer illegally fired them.

The governing collective bargaining agreement (“CBA”) between the employer, an auto parts manufacturer, and the union was set to expire. The union, pursuant to §8(d)(1) of the National Labor Relations Act (“NLRA”), served the company with notice of its intent to terminate the CBA. However, the union failed to timely file the notice with the Federal Mediation and Conciliation Service (“FMCS”) as required by §8(d)(3).

Subsequently, after negotiations failed to yield a new CBA, the employees went on strike, and the company continued to operate through the use of temporary replacement workers. The union soon realized that the required notice had not been filed and, therefore, the strike currently taking place was illegal. The union made an immediate and unconditional offer to return to work. The employer, sensing something was amiss, then discovered that the union had failed to timely file the FMCS notice. The employer decided to lock out the employees without reserving the right to terminate their employment. By being locked out without any reservation of rights, the strikers regained their protected status under the NLRA. The parties engaged in extensive bargaining over the course of several months. During that time, the employer assured the union that the locked out employees would be reinstated once a new CBA was established.

The protracted bargaining sessions eventually broke down, and the employer declared it would no longer waive its rights to discharge the employees. The employer then terminated all bargaining unit employees, regardless of whether they participated in the strike.

The Board found that it was undisputed that the employees had participated in an illegal strike and that they had lost their status as employees in doing so. However, the key moment was when the employer decided to lock out the employees after they made an offer to return to work immediately. Because the employer locked out the employees, and did not also reserve its rights to discharge them at that time, the Board affirmed the ALJ’s decision that the employer had “re-employed” the employees when it imposed the lockout.

Interestingly, the Board declared that the employees did not actually have to return to work to be considered re-employed and to receive the protection of the NLRA. The Board found it dispositive that the employer had not reserved its rights under §8(d), that it had assured the union the strikers would be reinstated, and that it constantly referred to the strikers as “employees” during the bargaining sessions. In other words, the employer had made a “knowing and reasoned determination,” based on the employer’s own interests, to not immediately discharge the strikers after learning of the illegal strike.

Aside from the striking employees, the Board also held that the employer violated the NLRA by refusing to negotiate with the remaining unit. The employer had improperly terminated all bargaining unit employees, including those who had been on otherwise approved leave at the time of the strike. These employees remained part of the bargaining unit, and the employer was required to continue bargaining with these employees.

Several lessons can be learned from the Douglas Autotech decision. First, an employer should always check to see whether a union has followed all necessary procedures and requirements and determine whether a strike is, in fact, permitted. Second, an employer should decide, at the moment it learns a strike is illegal, whether or not to discharge the strikers. The Board’s decision does not allow an employer to have its cake and eat it too: an employer cannot learn of an illegal strike, opt not to fire the strikers, make overtures it will reinstate the employees, and then fire the illegal strikers when discussions break down. While the Board appeared to leave some wiggle room in focusing on the employer’s failure to reserve its rights under §8(d), it would be wise for an employer to make the decision whether to terminate illegal strikers at the time the illegal strike is discovered.

As an aside, it should be noted that in January 2012, President Obama appointed three members to the Board to return it to its five member maximum. The appointees are: Sharon Block, Department of Labor’s (DOL) deputy assistant secretary for congressional affairs and a Democrat; Richard Griffin, general counsel for the International Union of Operating Engineers and a Democrat; and Terence Flynn, staff attorney for NLRB member Brian Hayes and a Republican. The board is now comprised of three Democrats and two Republicans. Stay tuned, however, because these recent appointments are being challenged by various interest groups.

Last week, the United States Supreme Court ruled for the first time that the First Amendment bars suits by ministers against their churches under employment discrimination laws. The ruling, however, is not limited to those individuals who head a congregation or to any one particular religion.

The case, Hosanna-Tabor Evangelical Lutheran Church and School, 565 U.S. ____ (2012), involved Cheryl Perich, a commissioned minister of the Hosanna-Tabor Evangelical Lutheran Church and School (Hosanna-Tabor), a member congregation of the Lutheran Church-Missouri Synod. Hosanna-Tabor classifies its school teachers into two categories: called and lay. Called teachers complete certain academic requirements, including a course of collegiate theological study, and must obtain the endorsement of their local Synod district and pass an oral examination. A teacher who meets these requirements may be called by a congregation; once called, a teacher receives the formal title “Minister of Religion, Commissioned.”

Lay teachers, by contrast, are not required to be trained by the Missouri Synod, nor are they required to be Lutheran. Although lay and called teachers at Hosanna-Tabor generally perform the same duties, lay teachers are hired only when no called teachers are available.

Perich began her employment with Hosanna-Tabor as a lay teacher in 1999. At that time, she had already undergone much of the required training to become a called teacher, and she completed her training in her first school year. She was then designated a commissioned minister. As a called teacher, she spent most of her time teaching secular subjects, such as math, language arts, social studies, science, gym, art, and music. Perich taught kindergarten during her first four years at Hosanna-Tabor and fourth grade during the 2003-2004 school year. She also taught a religion class four days a week, led the students in prayer and devotional exercises each day, and attended a weekly school-wide chapel service. Her religious duties consumed approximately 45 minutes of each workday.

In 2004, Perich developed narcolepsy and began the 2004-2005 school year on disability leave. In January 2005, she notified the school principal that she would be able to report to work the following month. However, the principal informed her that she had been replaced with a lay teacher. The congregation then offered to pay a portion of Perich’s health insurance premiums in exchange for her resignation as a called teacher. However, Perich refused to resign and she notified Hosanna-Tabor that she had contacted an attorney and intended to assert her legal rights. In response, Perich’s call was rescinded and her employment was terminated. The reason cited was Perich’s “insubordination and disruptive behavior,” as well as the damage she had done to her “working relationship” with the school by “threatening to take legal action.”

Perich filed a charge with the Equal Employment Opportunity Commission (EEOC), claiming that her employment had been terminated in violation of the Americans with Disabilities Act (ADA). The EEOC brought suit against Hosanna-Tabor, alleging that Perich had been fired in retaliation for threatening to file an ADA lawsuit. Perich intervened in the litigation. In defense, Hosanna-Tabor invoked the “ministerial” exception. According to Hosanna-Tabor, Perich was a minister who had been fired for a religious reason – specifically that her threat to sue Hosanna-Tabor violated the Missouri-Synod belief that Christians should resolve their disputes internally.

Federal circuit courts of appeal universally have recognized the ministerial exception as an exception to federal employment discrimination laws, such as the ADA, since the passage of Title VII of the Civil Rights Act of 1964. Grounded in the Establishment and Free Exercise Clauses of the First Amendment, the ministerial exception precludes application of federal employment legislation to claims concerning the employment relationship between a religious institution and its ministers. The underlying rationale is that it would be unconstitutional for the government to contradict a religious organization’s determination as to who can act as its minister. Until this point, however, the Supreme Court had never considered the issue.

The District Court agreed with Hosanna-Tabor and held that the ministerial exception applied and granted summary judgment in its favor. The Sixth Circuit, however, reversed the decision, focusing on the fact that the duties of called and lay teachers were identical. It also found it largely determinative that Perich spent the vast majority of her workday teaching secular subjects. Further, while it did not completely disregard that Perich’s title was commissioned minister, it held that such a title was not dispositive of the matter.

The Supreme Court, in a unanimous decision, held that the ministerial exception existed and applied to Perich in this case. Chief Justice Roberts, writing for the Court, examined the history of the Establishment and Free Exercise Clauses of the First Amendment and found that they were meant to ensure that the government would have no role in filling ecclesiastical offices. By applying employment discrimination laws to churches and their ministers, the government would be violating this purpose. After finding that the ministerial exception exists, the Court held that the Sixth Circuit made three errors in reaching its conclusion that Perich was not a minister under the exception.

First, the Court found that the Sixth Circuit was too dismissive of Perich’s title of commissioned minister. Although acknowledging that the title of “minister,” by itself, did not automatically invoke application of the ministerial exception, the Court held that Perich’s religious training and commission as a minister was “surely relevant” to the issue. Second, the Court held that the Sixth Circuit gave too much weight to the fact that lay teachers at the school performed the same religious duties as Perich. While it was relevant, it was not dispositive, and lay teachers were only used when called teachers were unavailable.

Finally, the Court held the Sixth Circuit placed too much emphasis on Perich’s performance of secular duties. The Court stated that although the amount of time an employee spends on particular activities is relevant in assessing that employee’s status, that factor cannot be considered in isolation. Perhaps emphasizing quality over quantity, the Court noted that Perich performed an important role in transmitting the Lutheran faith to the next generation by teaching her students religion four days a week, leading them in prayer three times a day, and taking them to a school-wide chapel service, which she led twice a year by choosing the liturgy, selecting the hymns, and delivering a short message based on verses from the Bible. Additionally, in her final year of teaching, she led her fourth grade students in a brief devotional exercise each morning. The Court also noted that Perich held herself out as a minister of the Church by claiming a special housing allowance on her taxes that was available only to employees earning their compensation “in the exercise of the ministry.”

While holding that the ministerial exception applied in this particular instance, the Court expressly stated that it was not adopting a bright-line formula for deciding who qualifies as a “minister” for purposes of the exception. In that regard, employers should take note of the Court’s two concurring opinions. First, Justice Thomas opined in his concurrence that courts should not even question a religious organization’s “sincere determination” that a given employee is a minister under its own theological tenets. Second, Justices Alito and Kagan wrote separately to note that while the exception is commonly referred to as the “ministerial exception,” it is by no means limited in application to those employees called “ministers” or to those religions having “ministers.” Rather, they said, it is important for courts to examine the function performed by persons who work for religious bodies.

Until the Supreme Court provides further guidance on the exception, lower federal courts will continue to define the contours of the exception on a case-by-case basis.

Some of you may recall my article a few years back entitled “What About Roberta? Transgenderism in the Workplace.” (If not, please click here.) In “What About Roberta,” we followed Bob, a long-term employee who came into your office seeking support as he went through the process of transitioning from male to female. We went through the state of the law, including several issues and challenges Bob’s situation presented, and discussed the steps employers should take regarding company policies and supervisor training, including reminding employers of the importance of treating Bob, like all employees, equally and with respect. Well, now a recent case before the United States Court of Appeals for the Eleventh Circuit (covering Alabama, Florida, and Georgia) gives us additional insight into how courts view and address gender identity issues.

Vandiver Elizabeth Glenn, formerly known as Glenn Morrison, began to take steps to transition from male to female in 2005. Part of the process required Glenn to live as a woman outside of the workplace. In October of 2005, Glenn was hired as an editor by the Georgia General Assembly’s Office of Legislative Counsel (“OLC”). In 2006, Glenn informed her boss that she was in the process of becoming a woman. On Halloween in 2006, OLC employees were allowed to come to work dressed in costumes. Glenn came to work presenting as a woman. Sewell Brumby, the head of the OLC and the person responsible for the office’s personnel decisions, told Glenn that her appearance was not appropriate and asked Glenn to leave the office. Brumby testified that he found it “unsettling to think of someone dressed in women’s clothing with male sex organs inside that clothing” and that it was “unnatural.” In 2007, Glenn informed her direct supervisor that she planned to proceed with the gender transition, would be coming to work as a woman, and would be changing her legal name. Glenn’s direct supervisor informed Brumby, and Brumby subsequently terminated Glenn on the grounds that the intended gender transition was inappropriate, that it would be disruptive, that some people would view it as a moral issue, and that it would make coworkers uncomfortable.

After being terminated, Glenn filed suit alleging that the discharge was the result of sex discrimination in violation of the Equal Protection Clause. Glenn also alleged that constitutional rights were violated because her employment was terminated due to her medical condition, Gender Identity Disorder (“GID”), a diagnosis listed in the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders with which Glenn was diagnosed in 2005. A federal district court ruled in Glenn’s favor on the sex discrimination claim but in Brumby’s favor on the medical condition claim. From there, the case went to the Court of Appeals for the Eleventh Circuit.

In Glenn v. Brumby, 2011 WL 6029978 (11th Cir., Dec. 6, 2011), the appellate court addressed Glenn’s sex discrimination claim under the Equal Protection Clause. In analyzing the issue, the Court turned to Price Waterhouse v. Hopkins, 490 US 228 (1989), the Supreme Court decision mentioned in my “What About Roberta” article. Price Waterhouse involved a female employee who was denied partnership in an accounting firm because she was considered too “macho.” As you may recall, the Supreme Court in Price Waterhouse concluded that discrimination based on sex stereotypes about how a man or woman should behave was in violation of Title VII’s prohibition against sex discrimination. Although Price Waterhouse was in the context of Title VII, the appellate court found the case instructive and ultimately concluded that there is “congruence between discrimination against transgender and transsexual individuals and discrimination on the basis of gender-based behavioral norms.” As such, the Court went on, “a government agent violates the Equal Protection Clause’s prohibition of sex-based discrimination when he or she fires a transgender or transsexual employee because of his or her gender non-conformity.”

This ruling is undoubtedly instructive for federal employers. It is also, however, quite instructive for private employers and companies. What is perhaps most interesting and instructive about the case for private employers and companies is the Court’s reliance on a diverse mix of cases involving various laws, such as Title VII, the Equal Protection Clause, and the Gender Motivated Violence Act. In reaching its conclusions, the Court noted the following:

[D]iscrimination against a transgender individual because of her gender-nonconformity is sex discrimination, whether it’s described as being on the basis of sex or gender. Indeed, several circuits have so held. For example, in Schwenk v. Hartford, the Ninth Circuit concluded that a male-to-female transgender plaintiff who was singled out for harassment because he presented and defined himself as a woman had stated an actionable claim for sex discrimination under the Gender Motivated Violence Act because “the perpetrator’s actions stem from the fact that he believed that the victim was a man who ‘failed to act like one.’” 204 F.3d 1187, 1198-1203 (9th Cir. 2000). The First Circuit echoed this reasoning in Rosa v. Park West Bank & Trust Co., where it held that a transgender plaintiff stated a claim by alleging that he “did not receive [a] loan application because he was a man, whereas a similarly situated woman would have received [a] loan application. That is, the Bank … treat[s] … a woman who dresses like a man differently than a man who dresses like a woman.” 214 F.3d 213, 215-16 (1st Cir. 2000). These instances of discrimination against plaintiffs because they fail to act according to socially prescribed gender roles constitute discrimination under Title VII according to the rationale of Price Waterhouse.

[emphasis added]

The takeaway from the Court’s reference to and reliance on these cases as well as Price Waterhouse appears to be that, whether inside or outside the workplace or whether Title VII can be alleged or not, treating an employee or customer differently because of his/her gender identity or “gender non-conformity” may run afoul of the law and lead to liability. As such, private employers and companies would be well-served by taking steps to make sure all individuals, regardless of their gender identity, are treated equally and fairly. The suggestions we offered in the last few paragraphs of “What About Roberta” on how to accomplish this for employees inside the workplace can and should be applied to non-employees (i.e. customers or clients) as well.

If you can’t say something nice, then don’t say anything at all! That’s what our mothers always told us, right? The waitress comes and asks how our food is, we say “fine,” even though our burger is overcooked and the fries are cold. When someone asks how you are, you say, “fine,” even though you are exhausted and have been fighting off a cold for a week. Well, when it comes to employee performance reviews, taking mother’s advice and claiming everything is “fine” is not necessarily the best approach.

We all know that most managers do not enjoy giving performance reviews and frequently approach them as “busy work” or just more paperwork to complete. One year of an employee’s efforts is summed up in just a word or two, such as “satisfactory” or “fair” (the performance review equivalent of “fine”). Sometimes managers would rather not give honest feedback to their employees about the need to improve their job performance and just give them a pass instead. This approach, while not uncommon, is unfortunate because when managers fail to provide meaningful comments in their reviews, not only do they deprive their employees of feedback that could actually help improve their performance, but they also provide their employees with potentially powerful evidence should the company and the employee end up in litigation one day.

For example, if an employee has been performing substandard work for years and the company finally decides to take some form of action, how is the company going to justify the sudden change in direction? The company cannot reasonably assert that the employee had been under-performing for a long time when its own reviews suggest otherwise. Employers must make sure their managers are providing straightforward, meaningful assessments of their employees’ performance. However, managers also must ensure that they are not including information that could potentially suggest discrimination.

One of the tricky areas is attendance – an issue that is commonly referenced in performance reviews. If your employee is absent or late all the time, this is an issue you would like to document and include in a review, right? Not so fast. What if the employee has been out on leave due to a medical condition or maybe had a baby in the past year? Perhaps the leave was Family and Medical Leave, or an accommodation to a disabled employee. In those cases, the leave should not be referenced as a negative in the review – generally just the non-medical leave should be included. Likewise, reference to an employee’s use of sick days may also be risky.

For example, under the Americans with Disabilities Act amendments, it is fairly easy for an employee to establish that he or she is “regarded as” disabled – the employee only needs to show that there was a record of an impairment. That record could, for example, be FMLA leave requests, doctor’s notes, or longer term restrictions. Such documents could provide the basis for an employee to claim the company “regarded” him as disabled and, as a result, discriminated against him by way of a negative review, especially if the review results in a lower raise or reduced advancement opportunities.

Additionally, companies must be cautious of including references to other potentially protected activity such as reports of harassment, disputes over wages or terms and conditions of employment. Indeed FMLA leave, report of harassment, or dispute over wages or the like should not be discussed during the performance review. Any less-than-favorable feedback in the review could be construed as retaliation for the protected conduct.

What is the lesson to be learned? Employers should use performance reviews as a tool to provide employees with an honest and useful assessment of their job performance. Tell them where they are doing well (something nice for Mom), as well as those areas in need of improvement. Performance issues should be addressed directly and specifically, including dates and examples, as well as goals and time frames for improvement. Finally, and perhaps most importantly, don’t forget to look at the review with a critical eye and be sure you are not handing over a valuable exhibit to a would-be plaintiff.

Employers can more effectively prevent liability in the present by learning from the collective mistakes of others that have come before them. Thus, while in a recent decision from the Seventh Circuit (covering Illinois, Indiana and Wisconsin), the court upheld summary judgment for the employer concerning claims of gender harassment, discrimination, and retaliation, the facts of the case serve as a poignant reminder of how not to deal with an employee.

For the most part, the decision in Overly v. Keybank Nat’l Assoc, 2011 WL 5505338 (7th Cir. Nov. 10, 2011) is largely an unremarkable gender discrimination claim. However, it was the behavior by the employer immediately after the employee resigned, and the court’s treatment of that behavior, which is of particular interest. Krysten Overly, a female employee, was a financial advisor for the defendant who reported directly to her supervisor, the regional sales manager. Overly disclosed to her supervisor that she had a practice of using an electronic signature on forms and also of encouraging bankers to sell off-menu financial products to customers at the branches she worked with. The supervisor instructed Overly to cease such practices and reported the practice to the company’s internal compliance officer, which triggered an investigation. As a result of the investigation, the compliance officer recommended terminating Overly for the two policy violations. However, Overly’s supervisor challenged the recommendation, arguing that Overly should remain employed at the bank. Ultimately, Overly was given a written warning and fined $1000 for violations of the policies.

At the end of that same month, Overly complained to company’s human resources department about the disciplinary action taken against her, as well as about allegedly sexist remarks by the same supervisor who defended her employment. Overly alleged that the supervisor had called her “cutie” between five and ten times, though the supervisor stopped doing so after Overly told him to stop. Also, in an email, the supervisor stated it was better for Overly and another junior female employee to attend a golf outing because “your pretty faces are much better than my ugly mug.” Overly also expressed concern that the discipline she had received would be marked on her license and hurt her chances for future employment. The human resources representative indicated to Overly that the company had put the matter behind them and that she should do the same. When Overly continued to inquire, the human resources representative advised Overly to keep her “head down and just go back to work and act as though everything’s fine.”

Just a few months later, the company began implementing a reorganization plan to nearly triple the number of financial advisors to lessen the number of branches that each financial advisor would serve. As a result of the reorganization Overly lost three of her old branches and gained two new branches. Overly was displeased because she believed all the good territories had been assigned to the new male financial advisor.

Overly filed a formal written internal complaint with defendant on August 7, 2007, alleging that she had been discriminated against based on her gender and retaliated against for her prior complaint to the human resources department. The company conducted an investigation but found no evidence of gender-based discrimination against Overly. Approximately one month after receiving the results of the investigation, Overly personally handed her resignation letter to her supervisor.

The supervisor, immediately upon receiving the resignation letter, began to applaud in front of Overly. He then grabbed Overly’s arm to push her out of the door to his office over the shouted protests of Overly. If this were not enough, as Overly left the supervisor’s office, he yelled a gender-based expletive at her.

Perhaps unsurprisingly, Overly soon filed a complaint with the EEOC alleging sexual harassment, discrimination, and retaliation. The court found that the “cutie” references and the single email regarding her “pretty face” simply did not rise to the level of severe or pervasive so as to constitute a hostile work environment. The court also held that there was no evidence of discrimination regarding the original discipline for the electronic signatures and selling off-menu products, as both actions had violated the company’s written policies. Finally, the court held there was no evidence of discrimination in the reorganization because it was part of a nationwide reorganization and there was no evidence of gender-based discrimination in the branches she lost or gained.

Of particular interest, however, was how the court dealt with the rather outrageous events that occurred at Overly’s resignation. As to the harassment claim, the court held that because the events occurred after Overly had already resigned, albeit by only a matter of seconds, the actions of the supervisor, while deplorable, could not serve as proof of objectively severe or pervasive gender discrimination during her employment. Similarly, as to the discrimination claim, the court found that the actions by the supervisor following her resignation were stray remarks and were neither proximate nor related to any adverse employment action as she had already resigned at the time. The court noted, however, that had the remark occurred during Overly’s employment and been shown connected to an adverse action, the result may have been much different.

Despite the fact the employer managed to avoid a finding of liability, this does not mean the defendant acted properly or appropriately. Rather, the defendant’s actions provide several good reminders of how not to treat an employee. First, when an employee makes an internal complaint of discrimination, the appropriate response is not to tell the employee to “move on,” “keep your head down,” and “act like nothing happened.” In fact, such a response almost invites a claim for retaliation, and it certainly would not play well in front of a jury. The best practice is, of course, to receive the complaint, reserve judgment, conduct an investigation, and issue a determination regarding the complaint.

Additionally, although the supervisor’s egregious conduct occurred after Overly’s resignation, he certainly did not help the company avoid litigation by parting with Overly amicably. And, of course, regardless of where or when the situation occurs, grabbing an employee’s arm and subsequently yelling gender-based expletives is clearly unacceptable. While the employer was “fortunate” that the supervisor waited until after Overly’s resignation to exercise such poor judgment, this does not mean such behavior should be tolerated in the workplace. After all, the court’s decision was fact-intensive and relied heavily on what had transpired previously between the employee and employer, along with precisely what was said by the supervisor after the resignation. Had the court been able to link the comments of the supervisor to any of the previous adverse employment actions the result may well have been different.

The holidays are upon us. ‘Tis the season for family, merriment, and, my personal favorite, overindulgence. It is thus no wonder that after the holiday season ends, one of the top New Year’s resolutions is to get healthy. Although there are those few, valiant individuals who actually succeed in implementing and maintaining such a resolution, many people – myself included – lose the momentum to continue with it quite quickly. Over the past few years, however, employers have begun implementing health and wellness incentive programs, which can not only support employees’ personal health goals, but which can also significantly reduce the skyrocketing health care costs for the employer.

A wellness incentive program (“WIP”) encourages employees to adopt or maintain a healthy lifestyle in a number of ways – or at least take the first steps toward learning about healthy alternatives.  For example, regular exercise can help reduce or eliminate a number of health problems, such as high cholesterol. And, the  thought goes, healthier employees can also mean increased productivity, better attendance, and improved morale. Therefore, through a WIP, employers will offer a variety of incentives to employees who maintain or achieve health-related goals, such as maintaining a cholesterol level below a certain number or earning points through exercising.

While this type of program seems like a simple appealing way to help accomplish the goals of improving employee health while reducing business costs, employers need to be aware that the way they structure WIPs could run afoul of federal, state, and/or local laws. Indeed, WIPs should be crafted in such a way that they do not favor one group of employees and/or potentially discriminate against another group. To demonstrate, the following scenarios present a limited sampling of some of the issues that could arise in formulating a WIP:

• Avoid pushing employees to achieve unattainable goals;
• Include a variety of incentives and requirements that do not all revolve around physical goals, which could disproportionately affect certain protected groups of employees;
• Offer alternatives;
• Aim for participation, not performance;
• Focus on education;
• Be sure the WIP does not encourage conversations about employees’ personal medical conditions or violate employees’ legally mandated privacy rights with regard to health and medical information; and
• Keep things positive, rather than imposing consequences for not meeting WIP goals.

Issues regarding the use of temporary personnel from staffing agencies can be confusing. One company pays the worker, but another directs that person’s day-to-day activities. So, for purposes of employment laws, which company is the person’s employer? A recent decision by the Fifth Circuit (covering Louisiana, Mississippi, and Texas), Johnson v. Manpower Professional Services, Inc., 2011 WL 4584757 (Oct. 5, 2011), addressed this issue.

Johnson v. Manpower Professional Services, Inc. involved a staffing agreement between Manpower Professional Services, Inc., a national staffing company, and Air Liquide Process & Construction.  Pursuant to the staffing agreement between the companies, Air Liquide managed and supervised the workers placed at its facility, and Manpower handled all administrative and payroll issues.

Willie Johnson, a black male, responded to Manpower’s advertisement for a recruiter position. As part of Manpower’s application process, he underwent a background check and drug test. Manpower then referred Mr. Johnson to Air Liquide, who approved him for the position.

For the first five weeks that Mr. Johnson worked at Air Liquide, he received overtime for the hours he worked in excess of 40 per week. But then Air Liquide’s Director of Finance and Accounting, who was Air Liquide’s “time approver” for Mr. Johnson, requested that Mr. Johnson’s status be changed from non-exempt to exempt.  Manpower complied with the request.

Approximately six months later, a new Director of Finance and Accounting began supervising Mr. Johnson, and based on negative feedback from Air Liquide managers regarding Mr. Johnson’s performance, he notified Manpower that he wanted Mr. Johnson replaced. Manpower again complied with Air Liquide’s request. Mr. Johnson’s replacement, a white female, was paid overtime pay and was not asked to submit to a drug test or background check.  Mr. Johnson sued both Manpower and Air Liquide under the Fair Labor Standards Act (FLSA) for unpaid overtime pay. He settled that suit with Manpower.

Mr. Johnson then sued both Manpower and Air Liquide, alleging violations of Title VII and Section 1981 for, among other things, his termination of employment and the failure to pay overtime. The district court granted summary judgment to both Manpower and Air Liquide, and Mr. Johnson appealed.   In analyzing Mr. Johnson’s claim, the Fifth Circuit had to decide whether Manpower or Air Liquide was Mr. Johnson’s employer. The Court applied a two-step standard laid out under Fifth Circuit law.  The first step was to determine whether either company fell within the Title VII’s statutory definition of an employer. Title VII defines an employer as “a person engaged in an industry affecting commerce who has fifteen or more employees …, and any agent of such a person…” The Fifth Circuit found that both Manpower and Air Liquide met this definition.

The second step was to apply the “hybrid economic realities/common law control test.” Under this approach, a court looks at both the degree of the right to control an employee’s conduct (e.g., the ability to hire, fire, supervise, and set the schedule of the employee in question) and the economic realities of the nature of the relationship (e.g., the payment of salary, withholding of taxes, provision of  benefits, and setting the terms and conditions of employment). The test is weighted in favor of the right-to-control component, which is  deemed the more important of the two factors.

In Johnson, the Fifth Circuit looked at the respective duties of Manpower and Air Liquide, as set out in the staffing agreement between the  companies. Under the agreement, Manpower’s responsibilities, once it had placed a worker at Air Liquide, consisted of:

• Maintaining personnel and payroll records;
• Paying, withholding, and transmitting payroll taxes;
• Making unemployment contributions;
• Handling unemployment and workers’ compensation claims; and
• Removing assigned employees at Air Liquide’s request, so long as there is a valid legal reason for doing so.

The Fifth Circuit held that, while Manpower was technically in charge of hiring and firing employees, it only did so upon Air Liquide’s approval or at Air Liquide’s request. Further, Mr. Johnson’s job performance had only been evaluated by Air Liquide.  Thus, the court concluded that Air Liquide, not Manpower, was Mr. Johnson’s employer. The Fifth Circuit explained its reasoning as follows:

To be sure, almost all of the factors under the economic realities test point to Manpower being Johnson’s employer, as Manpower paid  Johnson and withheld taxes on his behalf. Nonetheless, because the majority of the more important right to control factors point to Air  Liquide as Johnson’s employer, we conclude that Air Liquide and not Manpower is Johnson’s employer for the purposes of his overtime denial claim.

The Fifth Circuit then remanded that portion of the case back to the district court because Air Liquide had not provided a legitimate, non-discriminatory reason for changing Mr. Johnson’s status from non-exempt to exempt.

The Johnson case serves as a reminder to employers who use temporary personnel that, despite the fact that they do not handle the administrative ‘economic realities’ for temporary employees, they may still face liability under Title VII, the FLSA, and other employment statutes. Further, the standards that have been set out by courts and employment administrative agencies to determine whether a particular individual is an employee can be very fact specific, making it sometimes difficult for employers to know with certainty whether a particular relationship will be deemed an employer-employee relationship. As such, employers may want to proceed cautiously and take measures to ensure that temporary employees placed with them are treated in a manner consistent with applicable employment laws, as well as internal company policies.

There are a host of means by which employees (prospective, current, and past) can voice claims of discrimination, and employers must be prepared to respond to each method appropriately.  Further, no matter how proactive an employer is in implementing new procedures and policies, how thorough its investigative process, and how responsive it is to claims, an employer may find itself named as a defendant in a lawsuit. Litigation of employment related claims presents new challenges and involves unique considerations and decisions. For instance, employers defending a lawsuit filed in state court may, under certain circumstances, remove the case to federal court. There can be various tactical reasons for doing so, including different jury pools and judges, different procedures applied to the discovery process, and even the tactic of taking a plaintiff’s counsel out of his or her chosen venue (and perhaps comfort zone). However, while all federal district courts apply the same statutory removal provisions – 28 U.S.C. §§ 1441 and 1446 – federal courts interpret and apply these procedures differently. Thus, it is very important for employers – or at least their legal counsel – to understand these differences so as to not make a mistake and be stuck in the court you do not want to be in. A very recent federal court decision hit home this very point.

In an employment discrimination case where the employer is the sole defendant, there is no dispute about the time period in which the defendant employer must seek to remove the case to federal court. Pursuant to 28 U.S.C. § 1446(b), the defendant employer must file a notice of removal “within thirty days after its receipt, through service or otherwise, of a copy of the initial pleading” if it wishes to remove the case from state court to federal court. However, in cases involving multiple defendants – such as employment discrimination cases in which a plaintiff has sued his or her employer, as well as a co-employee – the federal circuits differ on the issue of when the time to remove the case from state court to federal court begins to run with respect to the defendants who were not the first defendant to be served with the complaint. On October 12, 2011, in Delalla v. Hanover Insurance, No. 10-3933, 2011 WL 4823483 (3rd Cir. October 12, 2011), the United States Court of Appeals for the Third Circuit (covering Delaware, New Jersey, and Pennsylvania) weighed in on the issue and held that, at least in that circuit, each defendant has its own 30-day deadline to remove the lawsuit.

The Delalla court rejected the minority view adopted by the Fourth and Fifth Circuits, which holds that the 30-day “removal clock” starts to run for all defendants on the date that the first defendant receives a copy of the complaint (the “first-served rule”). Instead, the Delalla court chose to adopt the majority view – followed by the Sixth, Eighth, Ninth, and Eleventh Circuits – which holds that the 30-day “removal clock” starts to run separately for  each defendant upon that defendant’s receipt of the complaint (the “later-served rule”). The difference between the rules has major implications for defendants in multiple-defendant lawsuits who were not the first defendant to be served. For example,  under the first-served rule, unless you were the first defendant to receive a copy of the complaint, you will have less than 30 days to file a notice of removal. In theory, under the first-served rule, a defendant’s time to file a notice of removal could expire even before that  defendant receives a copy of the complaint. Under the later-served rule, however, a defendant will always have 30 days from its receipt of  the complaint to file a notice of removal, regardless of whether the defendant was the first or last defendant to receive a copy of the complaint.

In rejecting the first-served rule and adopting the later-served rule, the court in Della, in noticing the inequities of the first-served rule, stated that:

The first-served rule not only unfairly prejudices later-served defendants, but it creates a perverse incentive system that encourages further inequity.  Under the first-served rule, a plaintiff who wishes to remain in state court benefits by serving a defendant who is indifferent to removal, and then waiting to serve other defendants who are more likely to wish to remove. The rule thus incentivizes plaintiffs to take advantage of the inequities inherent under the first-served rule. By protecting each defendant’s right to removal without  regard to whether other defendants were served earlier, the later served rule thus removes the incentive for “unfair manipulation by delaying service on defendants most likely to remove.”

Plaintiffs that bring multi-defendant actions in state courts within the Third Circuit, as well as the other circuits that follow the later-served rule (i.e., the Sixth, Eighth, Ninth, and Eleventh Circuits), will not be able to shorten a later-served defendant’s 30- day time period to file a notice of removal by delaying service on that defendant until after the plaintiff has served another defendant in the action.

However, for cases filed in state court within federal districts that have not adopted the later-served rule, plaintiffs can employ this tactic. As such, it is vital that a defendant employer served with a state court complaint in a multi-defendant employment discrimination case immediately forward the complaint to its legal department or outside counsel to determine whether the action is removable and, if so, when the defendant must file its notice of removal. In state court actions within those circuits, even the slightest delay in doing so could foreclose a defendant’s ability to remove the case from state court to federal court. Thus, while the mechanisms of removal may not be an everyday concern for most employers, not knowing where your particular circuit falls on the issue could prove costly.

Mr. Gerber is United Educators Select Counsel for New Jersey and Co-Chair of the Firm’s Employment Group.

The Family and Medical Leave Act (“FMLA”) not only confers upon employees certain substantive rights (most notably the right to take up to 12 weeks of unpaid leave to care for the serious health condition of the employee or family member), it also protects employees from being discriminated against and/or retaliated against for exercising their substantive FMLA rights. It is clear in this regard that if an employee takes FMLA leave, his/her employer may not use that exercise of rights as a negative factor when taking employment actions (e.g., hiring, promoting/demoting, disciplining) in connection with the employee. It is important to note that the scope of the FMLA’s anti-retaliation protections is not limited to concrete tangible employment actions, such as discipline, demotion, and discharge; to the contrary, any adverse action that would dissuade a reasonable employee from exercising his or her rights under the FMLA can support a retaliation claim. Harassment of an employee for taking FMLA leave falls squarely within the scope of the proscription against retaliation under the FMLA, and federal courts have most certainly entered judgments and punitive damage awards against employers where the evidence revealed that the employer engaged in harassment of an employee because of the employee’s use of FMLA leave. Of course, as is the case in other areas of employment law, conduct by an employer that amounts to petty slights, minor indignities and annoyances, petty oppressions, and other trivialities will generally not support a retaliation claim under the FMLA. That having been said, employers are well-advised to ensure that their managerial/supervisory-level personnel are able to compartmentalize and quell any ill will or animus they might harbor against an employee based on that employee’s lawful and proper exercise of rights under the FMLA – for, one really does  not want to find oneself defending an FMLA retaliation claim arguing, “Okay, sure we harassed Mr. Smith, but the harassment really didn’t amount to anything more than the heaping of a few minor indignities here and there.”

Just last month, the United States Court of Appeals for the Seventh Circuit (covering Illinois, Indiana, and Wisconsin) confronted a case in which the Court had found that the plaintiff had arguably been subjected to actionable retaliation and confronted a novel issue regarding the scope of remedies available under the FMLA. In 2001, the plaintiff in Breneisen v. Motorola, Inc., 656 F.3d 701 (7th Cir. 2011), had taken FMLA leave to receive treatment for gastroesophageal reflux. After exhausting his 12 weeks of FMLA, he returned to work but then took an approved (non-FMLA) medical leave for esophageal surgery. He returned to work after about three months but six months later took a third leave, from which he never returned to work, to undergo a total esophagectomy. As explained by the Court, Mr. Breneisen alleged that “the esophagectomy was necessary because a supervisor at Motorola caused him to suffer stress, high blood pressure, and stomach reflux, all of which exacerbated his pre-existing medical condition.” The gist of the plaintiff’s claim for monetary damages under the FMLA was that the stress caused by his employer’s alleged harassing conduct exacerbated his medical condition and caused him to be
permanently unable to work. In turn, he commenced a retaliation action seeking, among other things, an award of back pay and front pay.

Like the district court, the court of appeals rejected the employee’s argument that an employer’s alleged conduct that exacerbates the employee’s medical condition to the point where he/she cannot return to work following exhaustion of his/her FMLA leave entitlement can be the predicate for an award of front pay.  The FMLA, the Court concluded, simply did not authorize such relief under the circumstances present in the case – most notably, the fact that Mr. Breneisen had exhausted his leave entitlement. In explaining its rejection of the “exacerbation theory,” the Court explained:

Since stress can adversely affect many common ailments from which physically infirm employees suffer, granting relief on this basis would contravene the straightforward premise of the FMLA – to protect employees from adverse actions by their employers during finite periods
when short-term personal or family medical needs require it. When serious medical issues render an employee unable to work for longer than the twelve week period contemplated under the statute, the FMLA no longer applies. This is true regardless of the cause of the infirmity.

Although the holding in Breneisen is clearly “employer friendly,” and some management-side pundits are hailing the decision in broadbrush
terms based on its rejection of the exacerbation theory of recovery, it is important to bear in mind the narrowness of the Court’s holding in  light of the uniqueness of the facts. As an initial matter, the decision should most assuredly not be read as giving employers carte blanche to harass employees based on their proper exercise of rights under the FMLA. The determinative consideration that led the Court to conclude Mr. Breneisen had no claim for relief was that he had exhausted his FMLA leave. It certainly remains an open question whether Mr. Breneisen might be entitled to compensatory damages if he had not exhausted his leave entitlement and required additional leave due to the employer’s exacerbation of his medical condition. Moreover, as the Court noted in its decision, while the reason for Mr. Breneisen’s inability to work (namely, the alleged exacerbation of his condition caused by his superior’s harassment) was not relevant to his right to relief under the FMLA, it is certainly relevant to other claims Mr. Breneisen may have had under tort law, such as a claim for intentional  infliction of emotional distress under state law.

The bottom line here is that notwithstanding the limitation on recovery for harassment under the FMLA endorsed by the Seventh Circuit in Breneisen, employers should assiduously ensure that managers and/or supervisors do not let their employees’ proper exercise of FMLA rights become a factor in their employment actions or their interpersonal relations with their subordinates.

Employers should, of course, be very careful in how they respond to an employee’s workplace injury. Recent developments in the law, at both the state and federal levels, have made this even truer than before.

Many states, and the federal government, have created avenues for employees to sue their employer for retaliatory discharge if the employee is terminated following a workplace injury. Workers’ Compensation laws, the federal Family and Medical Leave Act (“FMLA”), and the Americans with Disabilities Act (“ADA”) each protect employees from post-injury termination in a variety of circumstances. Even in circumstances where an employer had already made the decision to terminate an employee before the employee’s injury, an employer still needs to be careful with regard to how it handles the termination.

Workers’ Compensation

Employers in several states should beware of claims of retaliatory discharge based on actions taken by the employer after an employee pursues workers’ compensation benefits. In Indiana, for example, employees can claim retaliatory discharge if their employment is terminated after pursuit of workers’ compensation benefits. Recently, the Ohio Supreme Court allowed an employee who was discharged one hour after reporting a workplace injury but before actually filing for workers’ compensation benefits to pursue a claim for wrongful discharge. Sutton v. Tomco Machining, Inc., 129 Ohio St.3d 153 (2011). One way that employers can help limit their liability in these types of lawsuits is by avoiding making derogatory comments about an employee’s injuries, or about the cost of an employee’s pursuit of a workers’ compensation claim.

FMLA

As virtually all employers know, the FMLA, generally speaking, requires covered employers to provide their employees up to 12 weeks of unpaid, job-protected leave. In addition to falling under the statutory definition of a “covered employer” under the FMLA, an employer can, in certain circumstances, be required to provide FMLA leave if they provide for such leave in their policy manuals, even if the employer would not otherwise be subject to the FMLA. Legal issues arise when employees ask for leave and the FMLA covered employer does not recognize or acknowledge that the employee’s leave request qualifies for FMLA leave. Under these circumstances, it is the employer’s responsibility to recognize that an employee’s leave request qualifies for FMLA leave and to provide the employee with FMLA forms. The consequences of a leave request turning into FMLA leave include, generally speaking, the obligation to return the employee to his or her prior position upon return from leave. Employers face potential retaliation claims if an employee is terminated following FMLA leave, or potential interference claims if the employer somehow obstructs the employee’s ability to take FMLA leave. As discussed above in the context of workers’ compensation laws, employers with employees on FMLA leave should avoid making derogatory comments about the need for such leave or regarding the costs of such leave to the employer.

ADA

As with the requirements of the FMLA, it has become common knowledge for virtually all employers that the ADA protects disabled employees, otherwise qualified, from discriminatory treatment.  Disabled employees include individuals who are substantially limited by an impairment, even now including some short-term impairments resulting from a workplace injury. Due to the recent amendments to the ADA, there has been an expansion of the definition of employees who qualify as “disabled.” The Equal Employment Opportunity Commission (“EEOC”) issued final regulations, effective this past May, based on the newly-amended ADA. The EEOC previously took the position that the duration or expected duration of an impairment should be considered in determining whether the impairment is disabling. That no longer appears to be the case under the new final regulations, which state that “an impairment lasting or expected to last fewer than six months can be substantially limiting.” (Emphasis added.) The final regulations go even further than the proposed regulations  on this point. In the proposed regulations, the EEOC identified a category of temporary, non-chronic impairments that usually would not  be considered a disability – for example, the common cold, seasonal influenza, a sprained joint, minor and non-chronic gastrointestinal disorders, a broken bone expected to heal completely, appendicitis, and seasonal allergies. However, the EEOC deleted this category in the
final regulations, explaining that the provision caused confusion and was too limiting.

The EEOC’s position on the issue of temporary impairments is not the law; while courts look to EEOC regulations for guidance, courts are  not bound by the EEOC’s view of the ADA. Indeed, it is not clear from the language of the amendments to the ADA that Congress intended to extend ADA coverage to temporary impairments. Moreover, it is still likely that certain impairments of short duration that are expected to heal quickly, such as a common cold or a sprained ankle, will not be considered disabilities. However, the regulations make it clear that employers should consider all impairments, even short-term ones, on a case-by-case basis. That certainly brings into play temporary impairments such as those resulting from workplace injuries to employees.

Conclusion

Termination soon after a workplace injury, or soon after pursuit of workers’ compensation benefits by an employee, can expose employers to a possible lawsuit based solely on the temporal proximity of the discharge to the injury and/or claim for benefits.  Employees can bring these claims even if the termination was otherwise justified and legitimate. The same is true of adverse action against an employee soon after his or her pursuit of FMLA leave, especially if employers make derogatory comments about the employee’s need for leave or the cost of that leave. Moreover, an employer has the obligation to treat a leave request as one for FMLA leave (if the employer otherwise qualifies for FMLA coverage) even if the employee does not specifically request FMLA leave by name.  Finally, the employer of a disabled employee has the obligation to engage in a good faith interactive process with the disabled employee before making any final decisions regarding whether that employee can be reasonably accommodated. Given new developments in the law, all of these considerations can now arise
even more than they did previously in the event of a workplace injury that results in the long-term – or even perhaps the short-term – impairment of the injured employee.

No insult in the workplace – or anywhere else for that matter – is probably more universal than to call someone out on their intelligence. Terms like “idiot,” “dumb,” “stupid,” or even “crazy” and “nuts,” can be commonplace and seem to cross all protected class categories – gender, race, national origin, religion, etc., right?  However, have you ever considered that an employee calling another employee such names could possibly be the basis of a disability claim? The U.S. District Court for the District of Minnesota decided just that earlier this year in the case of Schwarzkopf v. Brunswick Corp., 2011 WL 2215013, Case No. 10-cv-02774 (D. Minn., June 7, 2011).

Melvin Schwarzkopf was employed by the Brunswick Corporation, doing business as Life Fitness. He was originally hired as a fabricator and was later promoted to a “Mechanic I” position, which was essentially a janitorial position. Schwarzkopf also had struggled with depression and general anxiety disorder for most of his life – even voluntarily committing himself to a mental hospital for treatment years before he  was employed by Brunswick. At times his anxiety caused him sleeping problems which, in turn, made it difficult for him to focus and concentrate. At the time that he was initially hired by Brunswick, his symptoms were in remission.

A few years into his employment, Schwarzkopf informed two, more senior, mechanics, Duane Bauer and Mark Hager, of his anxiety and attention deficit disorders. According to Schwarzkopf, it was shortly thereafter that Bauer began calling him names like “stupid,” “idiot,” “mental case,” “dumb,” and “incompetent.” Schwarzkopf claimed that this happened on a nearly daily basis. Bauer also allegedly told Schwarzkopf that “we should put a shock collar” on Schwarzkopf because he was “so forgetful.” Schwarzkopf also claimed that Bauer, along with a fellow co-worker, told Schwarzkopf that they were worried he “might go postal.” This coworker also allegedly made other derogatory comments, including frequently calling him a “mental case.”

Schwarzkopf alleged that he complained to Hager, who by this time had been promoted to supervisor. Hager reportedly responded by laughing at the shock collar comment and not taking any action.  He, too, allegedly called Schwarzkopf an “idiot,” “dumb,” and “stupid.”

Schwarzkopf’s depression and anxiety disorder returned, causing him to lose sleep, lack focus, and struggle concentrating. His performance suffered, and Hager and the Human Resource Manager met with him to discuss the same. During this meeting, Schwarzkopf alleged that, if his performance had been poor, it was due to the constant shouting and ridicule. He also asked for a transfer. The Human Resources  Manager suggested that Schwarzkopf see a psychologist to help him work through his anxiety problems.  The Human Resources Manager also asked Hager whether he and any other maintenance employees had been harassing Schwarzkopf, and Hager denied it.

Schwarzkopf alleged that the harassment continued.  Schwarzkopf complained to Hager that Bauer called him names like “nuts,” “crazy,” “mental case,” “paranoid,” and “postal.” In response, Hager told him that the reason people called him names like that was because he acted so crazy. Eventually, Hager was promoted and Bauer replaced him as Schwarzkopf’s direct supervisor. During his supervisory role, Bauer allegedly continued to insult Schwarzkopf.

Thereafter, Schwarzkopf filed a charge of discrimination with the Equal Employment Opportunity Commission, asserting that Bauer and Hager had harassed him on account of his mental disabilities and retaliated against him due to his complaints.

The case made its way to the federal courts, where the company moved for summary judgment. The district court denied summary judgment as to Schwarzkopf’s harassment claims, as it concluded that Schwarzkopf offered sufficient evidence to create a jury issue on whether he was subjected to a hostile work environment based on his alleged mental disabilities. The Court reasoned that although some of the comments possibly tended toward “simple teasing,” others such as “go postal,” “paranoid,” and “crazy” were more significant. Further,  the Court focused on the fact that the name-calling allegedly occurred on a near-constant basis for more than a year, and thus the ridicule and insult could reasonably be found to have permeated the workplace.

What lessons can be drawn from the Schwarzkopf case? While courts and employment agencies have generally not gone so far as to find all name-calling in the workplace illegal, there are limits.  Employees, especially those in supervisory roles, should be trained to be professional and exhibit an appropriate amount of sensitivity. Further, name-calling, especially repeated name-calling, in the workplace should never be tolerated. Even if the court in Schwarzkopf found that the name-calling could not support a claim for harassment under the Americans with Disabilities Act, the name calling clearly had a negative effect on workplace morale. Finally, keep in mind that courts – and jurors – will not likely be sympathetic to companies that allow supervisors to pick on and make light of an employee who would be particularly susceptible to teasing and ridicule.

The Misclassification Initiative battles employer classification of putative employees as independent contractors in order to avoid payment of payroll taxes and workers’ compensation, unemployment, and disability insurance, as well as avoid compliance with minimum  wage, overtime, and other wage and hour laws. While presenting themselves as a united line, what the Initiative agency players seem  determined to ignore is that each is playing by a different set of rules. Each state and federal agency has a different statutory or common  law definition to apply in determining whether a worker is an employee or independent contractor. For example, state workers’  compensation and unemployment compensation laws may use definitions of who constitutes an “employee” that are more expansive than  the common law definition used by the IRS. Each player’s rules for determining independent contractor status are intensively factdrive and open to varying interpretations.

In this latest game plan, the new MOU between the IRS and DOL specifically permits DOL to provide the IRS with data that DOL believes  may raise employment tax compliance issues related to misclassification. However, because DOL applies a different standard than the IRS  to determine who is an employee, it is unclear what it will use to identify those issues. In turn, the IRS may share those DOL referrals with  state and municipal taxing agencies with which it has agreements to share tax return information. At last count, at least 37 states had  signed onto a Memorandum of Understanding with the IRS as part of the Questionable Employment Tax Practices (QETP) Initiative, which allows such sharing of tax and audit information and enforcement coordination. Through the QETP Memorandum of Understanding, the  IRS and the participating state workforce agencies may exchange employment tax information for civil cases, sharing either actual  employment tax reports or a template compatible with federal and state information; may participate in coordinated enforcement efforts;  and may even share independently conducted examination results or work side-by-side on an examination. Again, because the states and  the IRS play under drastically different rules, this communication may trigger unnecessary scrutiny of companies. Under the new MOU,  the IRS may also share data with DOL relating to misclassification trends, unless the data otherwise qualifies as confidential federal tax information. The IRS may also share with DOL any information (other than return information) that could constitute a violation of any federal criminal law that DOL enforces.

On the heels of the MOU announcement, the IRS showed a possible blitz to employers with the implementation of the “Voluntary  Classification Settlement Program” (VCSP). Under this program, employers may voluntarily reclassify their workers as employees for  future tax periods for employment tax purposes. To participate in the program, the employer must meet certain eligibility requirements,  apply to participate in VCSP, and enter into a closing agreement with the IRS. An employer is eligible if it is: (a) not currently being audited by any federal or state agency regarding worker classification; (b) has consistently treated the subject workers as non-employees; and (c)  has filed all required Form 1099s for the workers for the previous three years. If the employer meets the eligibility requirements and is  accepted, in order to receive the benefit of the program the employer must enter into a “closing agreement” with the IRS which, among  other provisions, extends the statute of limitations for collecting back taxes (from three to six years) for the employer during the first three years following entrance into the program. A participating employer will then be able to pay just 10 percent of the employment tax liability that may have been owed on compensation paid to the workers for the most recent tax year, without interest and penalties, and will not be  audited for employment tax purposes for prior years with respect to the classification of the workers.

At first glance, the VCSP can seem desirable because of the potential employment tax relief and amnesty. However, the VCSP may be a play  action pass by the Initiative team designed to fool your company’s defense. First, the forgiveness offered by the IRS does not extend to the  other state and federal agencies charged with classification compliance enforcement. Simply because the IRS allows a pass to employers  who reclassify workers prospectively for tax purposes under the program does not mean the employers would not be flagged and penalized  with a requirement by the DOL and other state agencies that the employers reclassify workers retroactively under their rules.  IRS information sharing through QETP and the new MOU would seem to increase employer liability risk for: misclassification liability for  state taxes, contributions, and penalties; failure to provide workers’ compensation and unemployment insurance; putative violations of employment discrimination, FMLA, and immigration laws; overtime and pension plan requirements; and failure to provide certain benefits, such as paid time off, sick leave, and retirement contributions. Simply, the VCSP does not provide amnesty for violations of any  law except those within the purview of IRS  enforcement. Additionally, by choosing to participate in the VCSP, a company must assume the  employee expenses it had previously avoided by using independent contractors. It will have to begin providing employee benefits and  comply with wage and hour laws and all other legal obligations owed to employees. Moreover, and possibly most obvious, it is unclear  what happens if the IRS does not accept an employer’s VCSP application. If an employer is rejected, then it may have opened itself to  multiple classification audits or agency enforcement actions. Finally, because the DOL has extended significant assistance to the private plaintiff’s bar through a one-way liberal information-sharing program having the misnomer “Bridge to Justice,” an employer’s admission of  misclassification may spur private wage and hour litigation.

Given how state and federal agencies are raising the stakes, to stay in the game companies must move with all due haste to carefully assess  their use of independent contractors. DOL has proposed a budget increase of 107 full-time employees and $15,223,000 to support their  team’s misclassification enforcement efforts in 2012. Coupled with the exponential growth in collective wage and hour misclassification  litigation, the team presents a formidable foe. Participation in the VCSP program or a similar amnesty program may not be the best course  given the inconsistent rules of the game across the country. Game strategy should be to assess what particular state and federal  classification standards apply to the company and then determine whether a self-audit may be warranted. Remaining alert and being  prepared is crucial so you have the advantage to avoid being leveled along with the playing field.

In a recent 60-Second memo we advised employers subject to the NLRB that a final rule was recently published requiring them to post a new employee rights poster by November 14, 2011. On October 5, 2011 the NLRB extended the implementation deadline from November  14, 2011 to January 31, 2012. Thus, the requirements discussed in the prior 60-Second memo “NLRB Requires Employers to Post New  Employee Rights Notice” will not be implemented until January 31, 2012.

This occurred on July 3, 2007, and after that time, Mr. Dediol alleged that he was called “Old man,” “Pops” and “Old mother******” up to a half dozen times a day. When Mr. Dediol requested a transfer to move to the New Car Department, Mr. Clay allegedly denied the transfer, stating, “Get your old f***ing a** over here. You are not going to work with new cars.” Mr. Clay also allegedly provoked fights with Mr. Dediol and made comments about Mr. Clay’s religious beliefs.

The tension escalated and came to a head during on office meeting on August 29, 2007. On that day, Mr. Clay allegedly proclaimed “I am going to beat the ‘F’ out of you” and “charged” towards Mr. Dediol in front of nine or ten other employees. Dediol worked the remainder of the day, but the next day, he stated, “I cannot work under these conditions – you are good people, but I cannot work under these  conditions.”

On August 22, 2008, Mr. Dediol filed suit in the Eastern District of Louisiana. The allegations included hostile work environment based on age, harassment based on religion, and constructive discharge.  Best Chevrolet filed a motion for summary judgment, which the district court granted. Mr. Dediol then appealed to the Fifth Circuit Court of Appeals (which covers Louisiana, Mississippi, and Texas).

The Fifth Circuit Court of Appeals reversed the district court’s grant of summary judgment for the employer. The Fifth Circuit looked to the Sixth Circuit case of Crawford v. Medina General Hospital, 96 F.3d 830, 834-835 (6th Cir. 1996), and noted that “at least one sister circuit has explicitly applied Title VII to a hostile work environment cause of action under the ADEA.” The Fifth Circuit went on to hold that a plaintiff may assert a hostile work environment claim based on age discrimination under the ADEA in the Fifth Circuit, holding that “Clay’s repeated profane references to Dediol, and the strident age-related comments about Dediol used by Clay on almost a daily basis within the work setting, are sufficient to create a genuine issue of material fact concerning Dediol’s ADEA based claim for hostile work environment discrimination.

To many employers, this decision comes as no surprise.  Harassment comes in all shapes and forms. It is not limited to situations concerning sex or race. Employers can be liable for age discrimination, and these cases are only likely to increase. Many older employees are delaying plans to retire for a variety of reasons.  With older workers in the workplace, tensions between younger employees (perhaps jockeying for promotions and advances) and older workers (perhaps occupying the positions of promotion and advancement) are only likely to increase. Younger employees may think that referring to someone as “pops” or “old fogey” is an innocent joke and not something that could rise to an actionable level of harassment. This case serves as an important reminder for the steps to take when drafting and implementing a harassment policy. Employers should consider the following:

• Ensure that your harassment policy clarifies that harassment based on any protected category, including age, is prohibited.
• Include specific examples within your harassment policy of the types of behavior prohibited. Your policy could specifically state that name calling on any basis is prohibited and could even cite the use of the words “pops,” “old man,” “old fogey,” etc., as an example of behavior which is prohibited.
• Ensure that your policy includes mechanisms for lodging complaints and that all complaints are investigated.  Employees must know that even what appears to be a harmless joke could be considered harassing behavior.
• Consider prohibiting all sorts of obscenities in your harassment policy. So often, we see the example of a person who swears and uses inappropriate language in the workplace. Possibly, the case described above could have had a different outcome if Mr. Clay referred to Mr. Dediol as “mother******”  instead of “old mother******.” However, it is possible that the court could have felt that just the use of “mother******,” given the constant references to Mr. Dediol’s age, was part of the hostile environment. For employers, erring on the side of caution may be the best course of action.
• Prohibit violent acts, not only in your workplace violence policy but also in your harassment policy. Your harassment policy could specifically state that intimidating or threatening behavior or remarks, violence, or threat of violence is prohibited. This would provide you, the employer, with an additional basis for discipline and or termination of employment.
• Be consistent in enforcing your policy. Do not brush aside comments based on age as something that is a mere joke while taking sexual harassment and racial harassment seriously. So often, we think of harassment as either sexual harassment or a racial epithet. As this case shows, that is not the case.

There is a fine line between a jovial workplace where familiarity breeds coarser language and lewder humor and one that lends itself to liability. Of course, employers do not want to prohibit all behavior to the point where someone cannot even say, “Gosh, I hurt my neck. I am getting old!” However, the fact is that age harassment can create liability. Be alert and aware of tensions in the workplace between employees, and take disciplinary action when necessary.

Ms. Eaton was a correctional officer with the Indiana Department of Corrections (“DOC”). She was warned about excessive absenteeism and told that  if her attendance did not improve, she would be moved from her current (and in her view, more desirable) schedule to a different work shift. Several months later, she was reassigned to this new work shift but did not end up working the new hours because she took FMLA leave. When she returned from her leave, she was assigned to her original work shift. A short time later, Ms. Eaton was in a car accident that aggravated a pre-existing  back injury. She was given work restrictions by her doctor, but she did not report these restrictions to the DOC until a later date.

Several months later, Ms. Eaton refused overtime. A hearing was held, and at that time Ms. Eaton disclosed her medical restrictions and stated that  she did not report them earlier because of her concern that she would be switched to the undesirable shift.  DOC told her she could submit her restrictions and her current work schedule would not be altered. Shortly thereafter, she used vacation time to visit an injured family member. On her return, she was assigned different job duties. She repeatedly refused this assignment due to severe back pain and requested a different  assignment. She also characterized the proposed new job as “the worst” job a corrections officer could have. Although Ms. Eaton pleaded with her supervisor to give her another assignment and insisted she did not want to quit, her supervisor demanded she turn in her badge. She did.   Eventually, the supervisor agreed to allow Ms. Eaton to return to work for her next scheduled work shift, but the supervisor soon changed his mind  and barred Ms. Eaton from entering the facility when she showed up for her next shift. She never returned to work.

The district court granted summary judgment to the DOC on the sex discrimination claim (Ms. Eaton abandoned her ADA claim), finding that Ms.  Eaton had not established a prima facie case because she had not identified anyone outside of her protected class who was similarly situated and treated  more favorably than she was. Ms. Eaton appealed, arguing that she had identified a male corrections officer who was similarly situated and treated  more favorably. The Seventh Circuit (covering Illinois, Indiana, and Wisconsin) agreed with Ms. Eaton and reversed.

The starting point for the analysis on appeal was defining “similarly situated.” The Seventh Circuit noted that comparators “must be similar enough  that any differences in their treatment cannot be attributed to other variables” but “not construed so rigidly or inflexibly that it [becomes] a useless analytic tool.” In short, a plaintiff must generally show that “the comparator had the same supervisor, was subject to the same employment standards  and had engaged in conduct similar to that of the plaintiff.”

Ms. Eaton had identified a male corrections officer who reported to the same supervisor as she did who had also refused an assignment, but the district court concluded that they were not similarly situated. In that instance, when the supervisor insisted that the male officer work the assignment, the officer became angry and quit. He returned to work less than an hour later, and his supervisor allowed him to return in his prior position without any discipline. The district court distinguished this conduct from Ms. Eaton’s by noting that, unlike the male corrections officer, Ms. Eaton had never actually quit (rather she just left), the male officer did not turn in his badge, and the male officer returned to work less than an hour later instead of the next work shift. In contrast, the Seventh Circuit concluded that there were sufficient similarities in their conduct – both refused an assignment from the same supervisor, both left the facility, and both returned to work promptly – in refusing to accept a work assignment that the jury should be allowed to decide if the difference was based on sex discrimination. In fact, the Court noted that Ms. Eaton’s conduct might be considered less egregious because she made it clear that she did not want to quit and her refusal to work was based on her medical restrictions.

The DOC made another argument to attempt to distinguish the conduct of Ms. Eaton and the male officer that the district court accepted: their different disciplinary history. The Seventh Circuit quickly dispatched that argument because the DOC did not attempt to justify Ms. Eaton’s termination based on her disciplinary record.

Accordingly, any difference in their disciplinary record was not relevant. Indeed, the Seventh Circuit reiterated that similarly situated in all material respects includes the common-sense caveat that the employer needs to actually consider the same factors when making the adverse employment decisions for the employees it claims are similarly situated.

Thus, Eaton serves as a reminder to carefully consider disciplinary action to ensure that employees who report to the same supervisor and perform similar work are treated in a like manner. An employer who fails to do so may find itself justifying its decision in a court room instead of in a human resources office.

]]> http://www.gshllp.com/60-second-memos/a-costly-reminder-about-the-importance-of-consistent-application-of-company-policies/feed 0 http://www.gshllp.com/firm-news/jonathan-d-goins-spoke-at-the-national-association-of-minority-and-women-owned-law-firms-namwolf-annual-conference http://www.gshllp.com/firm-news/jonathan-d-goins-spoke-at-the-national-association-of-minority-and-women-owned-law-firms-namwolf-annual-conference#comments Wed, 21 Sep 2011 15:20:52 +0000 GSH LLP http://www.gshllp.com/?p=5653 Jonathan D. Goins spoke at the National Association of Minority and Women Owned Law Firms (NAMWOLF) Annual Conference on September 20th in Las Vegas. He spoke on “Technology and Work for Hire IP: Special Considerations” during the CLE session, “Avoiding IP Pitfalls in Corporate Transactions”.

In a case of first impression, Dellinger v. Science Applications International Corporation, 2011 WL 3528750, Case No. 10-1499 (Aug. 12, 2011, 4th  Cir.), the Fourth Circuit held that the Fair Labor Standards Act (FLSA or the Act) does not protect job applicants from retaliation; rather its  coverage is limited only to an employer’s current and former employees.

In July 2009, Natalie Dellinger sued her former employer for alleged FLSA minimum wage and overtime violations.  Contemporaneously, Ms. Dellinger applied for a position with Science Applications. In August 2009, Science Applications extended a conditional job offer to Ms. Dellinger.  As part of the contingency, Ms. Dellinger was required to complete certain forms in order to gain the required security clearance for the job.  Among the information requested was whether she was currently involved as a party to any civil litigation. Ms. Dellinger disclosed her pending  FLSA lawsuit against her former employer. Several days after she provided the information, Science Applications withdrew the job offer. Ms. Dellinger then filed a lawsuit alleging that, by withdrawing the job offer, Science Applications discriminated and retaliated against her in violation of the FLSA.

Science Applications argued that Ms. Dellinger did not have a viable claim under the Act because the FLSA’s anti-retaliation provision protects  only current and former employees, not job applicants who have never worked for the employer. The section at issue, section 216(b) of the FLSA,  prohibits retaliation “against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding  under or related to this chapter.” Science Applications’ position was that this section is limited only to employees who have had some employment  relationship with an employer. The court agreed, holding that under the FLSA, “an applicant is not an employee.”

Even the fact that Ms. Dellinger had been given a conditional job offer did not affect the outcome of the decision. The court reasoned that section  203(g) of the FLSA defines “employ” to mean “suffers or permits to work.” Because Ms. Dellinger never actually began working for Science  Applications, she was not an employee and thus not covered by the Act.

While the court expressed sympathy for Ms. Dellinger’s position, it was not willing to find in Ms. Dellinger’s favor because to do so would “clearly  broaden the scope of the FLSA beyond its explicit purpose of fixing minimum wages and maximum hours between employers and employees.”

So does this case give employers carte blanche not to hire any applicant who has filed a FLSA complaint? While the court expressly provided that  the FLSA’s anti-retaliation provisions do not extend to job applicants, the case is limited to the Fourth Circuit (which includes Maryland, Virginia, South Carolina, North Carolina and West Virginia). Moreover, this issue is far from settled and sure to be tested in other circuits, perhaps  eventually ending up at the Supreme Court’s door.

Indeed, this case should not cause employers to let their guard down when it comes to job applicants. When the case was tried, the Department of  Labor (DOL) and the Equal Employment Opportunities Commission submitted an amicus (friend of the court) brief in support of Ms. Dellinger’s  position. The DOL, which enforces the FLSA, was unequivocal in its agreement with Ms. Dellinger that the FLSA’s anti-retaliation provisions extend  to job applicants. The DOL expressed concern that applicants would be “blacklisted” and remain unemployed indefinitely if the lower court’s  decision were allowed to stand. The DOL also argued that such an action would have “a chilling effect” on individuals’ willingness to exercise their  rights under the FLSA.

The language of the brief proves instructive and reminds employers that despite the Dellinger decision, the DOL’s position is that the employers  cannot discriminate against job applicants who have made FLSA complaints. Indeed, given how strongly the DOL advocated for the court to find in Ms. Dellinger’s favor, it seems clear it will continue to actively pursue action against employers who take adverse action against job applicants.

Serednyj was employed as an activity director at a nursing home by Beverly Healthcare. In December 2006, Serednyj learned she was pregnant but suffered a miscarriage days later. A few weeks thereafter, in January 2007, Serednyj learned she was pregnant again. However, six weeks into the pregnancy, she began suffering from complications and was told that if the complications were not addressed immediately she may suffer another  miscarriage. A doctor instructed her to avoid strenuous activities and heavy lifting and Serednyj informed Beverly of this.

Beverly responded that under its modified work policy, Serednyj could not return to work until she was cleared to resume full duty work by her  doctor. The policy stated that Beverly only provided one type of restricted or limited duty for non-work related injuries or conditions – an  accommodation under the ADA. The policy further provided that no other restricted or limited duty was permitted for non-work related injuries or conditions. Beverly had apparently uniformly and consistently applied this policy across the board.

Serednyj was placed on bed rest for two weeks, after which she was to be reevaluated by her doctor. Beverly informed Serednyj that if she could not return to work at full duty after the two-week period she would be let go. Serednyj’s doctor continued to restrict her to light duty following the two-week period, as any strenuous activity or heavy lifting would jeopardize the baby. Thus, in accordance with its policy, Beverly terminated Serednyj. Serednyj brought suit alleging gender and pregnancy discrimination under the Pregnancy Discrimination Act (PDA) and Title VII, disability discrimination under the ADA, and retaliation. The district court granted summary judgment to Beverly, and the Seventh Circuit Court of Appeals affirmed.

The issue of first impression addressed by the Seventh Circuit was whether pregnancy complications rendered Serednyj “disabled” under the ADA.  Of course, disability is defined under the ADA to mean (1) a physical or mental impairment that substantially limits one or more of the major life  activities; (2) a record of such impairment; or (3) being regarded as having such an impairment.  The court found that Serednyj did not qualify  under any of the three prongs.

The court acknowledged that while a normal pregnancy is specifically excluded as a physical impairment, 29 C.F.R. Pt. 1630, App. § 1630.2(h), complications which may constitute physiological disorders, such as the premature rupture of membranes or the risk of premature birth, could  qualify as physical impairments. However, even if a pregnancy complication is considered a physical impairment, the court noted the significant  hurdle a plaintiff would face in showing a pregnancy complication limits a major life activity.

The court observed, “Pregnancy is, by its very nature, of limited duration, and any complications which arise from a pregnancy generally dissipate  once a woman gives birth. Accordingly, an ADA plaintiff asserting a substantial limitation of a major life activity arising from a pregnancy-related  physiological disorder faces a tough hurdle.” The court discussed and acknowledged that there were foreseeable circumstances where complications that developed during pregnancy would not dissipate shortly after the pregnancy ended, and may qualify as a disability.  However,  such was not the case with Serednyj. Because Serednyj’s complications did not last throughout her pregnancy or beyond giving birth, the court  held that even if her complications qualified as a physical impairment, they did not substantially limit a major life activity given their transitory  nature and, thus, she was not disabled under the ADA.

The decision does come with an important caveat that may limit its import on future cases. The court analyzed the case under the pre-2008  amendments to the ADA given that the events transpired prior to the effective date of the amendments. It is not certain at this time whether a  similar fact pattern would be decided precisely the same under the newly amended ADA. After all, the avowed intent of the 2008 amendments were  to make it easier for employees to sue for disability discrimination. Despite the fact the amendments do not address pregnancy with any  specificity, it seems certain that an enterprising plaintiff’s attorney will argue that the amendments have changed the law regarding pregnancy and disability nonetheless.

Also of note is the Seventh Circuit’s analysis of whether the treatment of Serednyj by Beverly violated the PDA. The court found that there was no  violation of the PDA given that Beverly had followed its policies uniformly and the policy was pregnancy-blind.  The court explained, “The policy complies with the PDA because it does, in fact, treat non-pregnant employees the same as pregnant employees — both are denied an  accommodation of light duty work for non-work-related injuries. This is all the PDA requires. We, therefore, agree with the district court and find  that Beverly’s modified work policy is ‘pregnancy-blind,’ and therefore valid.”

In addition to instructing as to the possible future treatment of pregnancy complications under the ADA, this case also serves as an excellent reminder of the importance of developing policies proactively and following them consistently and uniformly. It was because the employer had a clear policy and followed that policy – even in light of the sympathetic plight of its employee – that the employer was able to avoid liability.

On June 8, 2011, the EEOC held a Commission Meeting where the use of leave as a reasonable accommodation was explored. During the meeting, the EEOC reiterated the importance of providing leave in certain circumstances as a reasonable accommodation. The EEOC noted that while many requests for leave can be handled under an employer’s regular leave policies, some situations require making exceptions to an employer’s leave policies. For instance, the EEOC specifically provided its stance on “no fault” leave policies – i.e., those policies under which an employee is automatically terminated after using a certain amount of leave – stating that such policies “must be modified as a reasonable accommodation, absent undue hardship, if an employee with a disability needs additional leave.” (Emphasis added)

The Commission Meeting follows a recent trend of increased EEOC challenges to employer leave policies. This trend is perhaps best  demonstrated by review of recent press releases from the EEOC, which have highlighted the EEOC’s role in recent litigation:

• Phone Company Pays $20 Million to Settle Nationwide EEOC Disability Suit. The EEOC charged that the company violated the ADA by  refusing to make exceptions to its “no fault” attendance plans to accommodate employees with disabilities. According to the EEOC, under  the challenged attendance plans, if an employee accumulated a designated number of “chargeable absences,” the company placed the employee on a disciplinary step which could ultimately result in more serious disciplinary consequences, including termination. The EEOC  asserted that the employer failed to provide reasonable accommodations for people with disabilities, such as making an exception to its  attendance plans for individuals whose “chargeable absences” were caused by their disabilities. Instead, the EEOC said, the company disciplined or  terminated employees who needed such accommodations.
• Restaurant Pays $1.3 Million to Settle EEOC Disability Discrimination Lawsuit. The EEOC alleged that the employer maintained a maximum  medical leave policy that automatically denied workers any additional medical leave beyond a pre-determined limit, even when additional  leave was required by the ADA as a reasonable accommodation, resulting in the unlawful termination of a class of workers.
• Teleconferencing Company Pays $40,000 to Settle EEOC Disability Discrimination Law Suit. The EEOC charged that the teleconferencing  company violated the ADA when it refused to accommodate the disabilities of a longtime employee, who had been seriously injured in an  automobile accident on her way to work in February 2009, by refusing to extend her leave of absence for one month. Instead, the EEOC  alleged that the company terminated her right after she had received clearance from her doctor to return to work in one month.
• Retailer Pays $6.2 Million for Disability Bias. In this case, the company had a policy where employees could receive one year of leave. The  Chicago Area EEOC office described this case as one where “A service technician work[ed] for many years for a giant retailer with a  maximum one-year leave policy. If you are on leave for more than a year, you are out the door.” The EEOC alleged the employer failed to  satisfy its ADA obligations by placing the service tech on leave and then failing to seriously consider him for a reasonable accommodation  that would put him back on the job – including reassignment to another position, even though the employee received one year of leave.
• National Grocer Pays $3.2 Million to Settle Disability Discrimination Suit. The company also maintained a one-year disability leave period.  The EEOC alleged that the employer terminated employees at the end of the year rather than returning them to work with a reasonable accommodation, or considering whether there was a reasonable accommodation that could allow them to return to work prior to the  expiration of the leave period. The case was resolved by the court’s entry of a $3.2 million consent decree.

Unfortunately for employers, neither the EEOC nor federal courts has provided clear-cut guidance as to how much leave an employer must  provide to an employee. However, based on the aforementioned litigation, employers may want to consider the following principles when  making that determination:

• Engage in the interactive process. The amount of leave provided to employees is meant to be an individualized, fact-intensive approach.  Make sure that you are discussing with the employee how much leave he or she may need. Do not just turn down the employee’s leave  request because the requested leave time exceeds your company’s policy.
• Don’t assume a generous leave policy will suffice. As seen from the press releases, generous leave policies do not necessarily equate to  insulation from litigation.
• Consider whether the leave will create an undue hardship.  While leave does not need to be provided if it causes an undue hardship, certain  factors will never make the request for leave an undue hardship. For instance, the fact that other employees are angry over the amount of  leave provided and the anger negatively impacts morale will never suffice to prove undue hardship. Moreover, when discussing the undue hardship analysis in leave situations, the EEOC has stated that “rarely is cost asserted as an undue hardship to providing leave as an  accommodation.” Rather, “[i]n certain circumstances, undue hardship will derive from the disruption to the operations of the entity that  occurs because the employer can neither plan for the employee’s return nor permanently fill the position.” Undue hardship related to leave may depend on such factors as the employer’s ability to have the employee’s duties performed in his or her absence and the consequences  to the employer’s business if the duties cannot be performed by others.
• Ensure there are exceptions for fixed-leave policies. The EEOC guidance is clear that an employer may not simply follow its own fixed-leave policy and terminate a disabled employee who needs leave beyond the set period without considering whether additional leave could be  provided without undue hardship.
• Don’t provide too much leave. Follow-up. Ensure your company has written policies in place for following up with employees on medical  leave. Do not leave employees out on leave indefinitely for years on end with no communication. When that employee then contacts you  regarding return to work, your business may not be able to establish undue hardship in returning the employee.
• Communicate with third-party administrators. Some employers utilize third parties to assist them with leave management. Ensure  third-party administrators are appropriately communicating with the employee and conveying the communications to you.

Above all else, documentation is key. Not only should your company document efforts to engage in the interactive process, but don’t  “leave well enough alone.” When an employee does not return from leave, make sure efforts to communicate with the employee are  documented. Failure to do so may result in the type of press you don’t want.

Evidence preservation – especially electronic evidence preservation – can be complicated. When should you make the first move? When do voluntary acts turn into obligations? What should you do if you screw up? Indeed, if you think about it, navigating the e-discovery preservation  process is much like navigating a relationship. These two seemingly distinct concepts just may have more in common at the fundamental level than  you might initially think.

Timing really is everything. Admit it – there’s that one person who you had your eye on, but who got away because you waited too long to make a move. Had you acted just five minutes earlier, you’d have that person in your life. But now, that person is gallivanting around town with someone else. And you? You’re left with those irritating “what ifs.” Similarly, when it comes to evidence preservation, if you wait too long to “pull the trigger”  on preservation – to take that step to put the brakes on any automatic erase process, contact the possible witnesses and other important role  players to inform them not to delete any emails, or send out the all-important litigation hold letter – you may miss your window of opportunity to ensure that all of the potentially responsive records are preserved. After all, the last thing you want is to be caught off guard by an ex-employee producing a smoking gun email that had been deleted before the litigation hold went into effect.

The duty to preserve extends to all potentially relevant data, regardless of the form; therefore, ensuring that electronically stored information (ESI) is saved, stored, backed-up, and not otherwise deleted or destroyed is of utmost importance in today’spaperless world. See Zublake v. UBS  Warburg LLC, 220 F.R.D. 212, 216-17 (S.D.N.Y. 2003). Unfortunately, the consequences of waiting too long to issue your litigation hold notice or otherwise putting in place a non-deletion and preservation process extend far beyond the “what ifs.” In fact, they can include court-ordered   monetary sanctions for spoliation or failing to preserve; adverse inference jury instructions; or, worst case scenario, a default judgment. Thus, you
must be keenly aware of the “trigger date,” which causes the duty to preserve all potentially responsive records to kick in.

This “trigger date” occurs when the possibility of litigation is reasonably anticipated, regardless of whether you are commencing the suit or on the receiving end. Zublake, 220 F.R.D. at 216-17. At least one court has held that the trigger date occurs when a company receives a demand letter from a potential plaintiff or has actual receipt of a complaint. Cache La Poudre Feeds LLC v. Land O’Lakes, Inc., 244 F.R.D. 614, 621 (D. Colo. 2007).

Another court held that the trigger date occurred as early as when the company received a telephone call from a potential plaintiff alleging violations of the law. See KCH Services, Inc. v. Vanaire, Inc., et al., 2009 U.S. Dist. LEXIS 62993 (W.D. KY. July 22, 2009). Getting to know the important people early on is crucial. Meeting the friends is a big step – important enough that it could set the tone for the rest of your relationship.  These are the people who can provide you with the inside scoop, tell you about the likes and dislikes of your object of affection, and warn you of crazy exes. Likewise, when it comes to evidence preservation, knowing who all the important role players are is critical. While the key players here are the individuals likely to have ESI or other evidence (1) relevant to the issues in the suit; (2) relevant to the events that underlie the litigation; or (3) information that could lead to the discovery of such evidence, identifying the confines of such group can be difficult.  Goodman v. Praxair Servs., Inc., 632 F.Supp. 2d 494, 512 (D. Md. 2009). It is essential to cover your bases and make inquiries of the key players you know to see if  there are other individuals whose electronic data should also be preserved.

Management and Human Resources personnel, as well as coworkers who had consistent contact with the opposing party, are the obvious actors. However, support staff or other employees who have access to key information should not be overlooked; nor should IT personnel who could prevent destruction of relevant data, and who have the means to uniformly adjust any electronic deletion settings. See Scalera v. Electrograph Sys. Inc., 2009 WL 3126637, *15 (E.D.N.Y. Sept. 29, 2009); Treppel v. Biovail Corp., 249 F.R.D. 111, 118 (S.D.N.Y. 2008). And, while delving into the  realm of exes in the relationship world is commonly avoided at all costs, it is crucial not to avoid the exes when dealing with record preservation.  This is so because numerous ex-employees could be in possession of relevant, responsive information that your company may be required to produce. Importantly, you are responsible for all relevant information in the possession of any non-parties or party agents who could be deemed  under your “custody or control,” if you have the legal authority or practical ability to ensure the preservation of the information they possess.  Goodman, 632 F. Supp. 2d at 515-16. Therefore, in many situations, even those parties that might seem tangential to a lawsuit should receive the hold notice.

Narrowing down the options too early could prove problematic. When in a relationship, it is generally advisable to take things slow, especially in  the beginning stages. By erring on the side of caution, you not only avoid smothering each other, but you also can reassess whether to make a  serious commitment. However, when it comes to evidence preservation, the opposite is usually true – it is almost always prudent to “smother away”  and preserve as much as possible, as soon as possible. This will benefit you in the long-run because, while not everything you preserve will be discoverable, there can be significant consequences for failing to capture unique relevant data. So, act fast and think big, and sort through the data later to identify what is needed.

Once you do make it official, stay committed. Relationships are only successful if there is ongoing communication and long-term commitment.   Likewise, when it comes to evidence preservation, a litigation hold policy should not be disseminated once and never talked about again. Make sure  to be sufficiently specific and detailed in your litigation hold policy; inform the recipients of its purpose and importance; and continually monitor and enforce compliance with the notice, in order to assure reasonable efforts are being made to meet your duty to preserve. See Samsung Elec. Co. v. Rambus Inc., 439 F. Supp. 2d 524, 565 (E.D. Va. 2006); Zublake v. UBS Warburg LLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004). That said,  there will undoubtedly come a time when you mess up. In either situation, step up the charm and mitigate. While in a relationship that may mean  flowers or giving up control over the television remote, in the evidence preservation world, it means taking immediate steps to reduce the impact  of the loss of data or destruction of documents – you will most likely still have to endure the court’s fury, but you may avoid hefty sanctions or  other dire consequences.

It would be impossible to cover every aspect of either subject here, much less cover them in a manner that would apply uniformly to every person, corporation, organization, or other entity. Thus, it is wise to log these basic principles as a starting point. Follow the relationship advice at your  own risk; however, make it a point to comply with the essential, basic principles of evidence preservation, as well as check with your state laws  regarding the subject. After all, as the defendants in the landmark Zublake case discovered, disregarding the necessity of distributing and  monitoring a litigation hold notice and failing to preserve data could land you with an adverse inference jury instruction, as well as an eventual  $29.2 million verdict against you. Zublake, 220 F.R.D. at 218. And, my guess is that an outcome like that doesn’t exactly qualify as a fun fact certain to land you a first date.

On April 12, 2011, Wisconsin Governor Scott Walker signed 2011 Wisconsin Act 14. In effect, 2011 Wisconsin Act 14 rolls back the minimum automobile insurance coverage limits to pre-2010 levels, prevents policy holders with more than one automobile from stacking policies, and allows reducing clauses in insurance policies.

Act 14 takes effect on November 1, 2011, and applies to policies that are new or renewed on or after the effective date.

The following is a brief synopsis of modifications made under the new legislative reforms.

Coverage Limits:

• Maintains the requirement that every motor vehicle operated in Wisconsin be covered by an insurance policy. Wis. Stat. §121.555(2)(a).
• Reduces the minimum mandatory liability coverage from $50,000 to $25,000 for each person, from $100,000 to $50,000 for each accident, and from $15,000 to $10,000 for property damage. It also repeals the mechanism for the Wisconsin Department of Transportation to index the limits to inflation. Wis. Stat. §121.555(2)(a).
• Reduces the minimum uninsured coverage from $100,000 to $25,000 per person and from $300,000 to $50,000 per accident. It also reduces the minimum medical payments coverage from $10,000 to $1,000 per person. Wis. Stat. §§632.32(4)(a)(1); 632.32(4)(a)(3m).
• Revises the definition of an “uninsured motor vehicle” to include a “phantom vehicle” that may cause an accident without physical contact between the vehicles. Proof of an accident with a phantom vehicle requires corroboration by a witness other than the insured, and requires timely notice of the accident to police and the insurer. Wis. Stat. §632.32(2)(g).

Underinsured Motorist Coverage:

• Underinsured motorist coverage is no longer mandatory. Wis. Stat. §632.32(4).
• If underinsured motorist coverage is not included in the policy, a written notice of its availability must be provided to the unsured. The notice is required only one time, in conjunction with delivery of the policy. Wis. Stat. §632.32(4m)(a).
• Rejection or acceptance of the underinsured motorist coverage does not need to be in writing. Absence of premium payments is proof of rejection of the coverage. Wis. Stat. §632.32(4m)(b).
• If an insured does accept underinsured motorist coverage, the coverage limits must be at least $50,000 per person and $100,000 per accident. Wis. Stat. §632.32(4m)(d).
• NOTE: The definition of underinsured motorist coverage is repealed and left undefined in the statutes, to be determined by each individual insurance policy.

Stacking and Reducing Clauses:

• Allows an insurance policy to include anti-stacking clauses, and clarifies that an insurance policy may limit, restrict, reduce, or exclude coverage  for a vehicle for which the person is not insured. Wis. Stat. §§632.32(5)(a)-(f).
• Provides that for a person who was not using a motor vehicle at the time of an accident (e.g. a pedestrian struck by a vehicle), coverage is the highest single limit of uninsured, underinsured, or medical payments coverage, whichever is applicable, for any motor vehicle for which the person is insured. Wis. Stat. §632.32(5)(g).
• Allows an insurance policy to reduce limits by the amount of payments made by a third party with legal responsibility for payments, such as the  at-fault driver’s insurance policy, worker’s compensation, or disability benefits. Wis. Stat. §632.32(5)(i).

Miscellaneous Provisions:

• Repeals the prohibition against allowing an insurer to place an applicant who has not previously had motor vehicle insurance in a high-risk  category for assessing risk.
• Requires an insurance policy for a human service vehicle used to transport elderly and disabled persons to include property damage coverage of at  least $10,000 and bodily injury liability coverage of at least $75,000 per person. Wis. Stat. §344.55(1).
• Exempts a commercial liability, umbrella, or excess liability policy from the requirements for minimum uninsured and medical payments  coverage, and from the mandatory offer of an uninsured and underinsured policy. Wis. Stat. §632.32(4m)(e).

Ordinarily, when you think of a compensable injury for worker’s compensation purposes, you think of an injury that occurs on the worksite while  performing services growing out of or incidental to employment. What about injuries that occur while engaging in recreational or fitness activities, such as basketball or softball, “on the clock”? Are these injuries covered by worker’s compensation laws?

An interesting series of cases on this question has some employers raising eyebrows and rethinking the way they approach what employees do both offsite and onsite during working hours or while on the clock. In one of the more recent cases, the Wisconsin Court of Appeals upheld an award of worker’s compensation benefits for an employee who injured himself while playing basketball during working hours. See City of Kenosha v. Labor & Industry Review Commission, 2011 WI App 51, 797 N.W.2d 885 (Wis. Ct. App. 2011).

The facts in this case were relatively straightforward and undisputed. Captain Charles Leipzig, a firefighter for the City of Kenosha (the “City”), was playing basketball with fellow firefighters and members of the public in a public park next to the fire station.  While playing, Leipzig reached for the ball and heard a “pop” in his right arm. The “pop” was a “distal biceps rupture,” which resulted in months of treatment and missed work. At the time of the injury, Leipzig was on active duty working a twenty-four hour shift.

Following the injury, Leipzig filed an application for worker’s compensation benefits seeking, among other items, payment for medical expenses. At the hearing that followed, the City’s Fire Chief testified that it was common for on-duty firefighters to play basketball during their shifts. Testifying further, he explained that playing basketball during working hours was not considered an abandonment of job responsibilities and that it is important for firefighters to be physically fit to handle the stress and demands of firefighting. Given this, Leipzig argued that the injury was related to and arose out of his employment as a firefighter.

The City, in response, argued that the injury did not arise out of any service or duty connected or incidental to his employment and, as such, was not compensable. After all, the City argued, Leipzig was a firefighter, not a basketball player. In support of its position, the City cited an exception/exclusion to the worker’s compensation law in Wisconsin that provides that an employee who injures him/herself while engaged in voluntary and uncompensated activity designed to improve the physical well-being of the employee is not entitled to worker’s compensation benefits because the employee is not engaged in activity growing out of or incidental to his/her employment. (For purposes of our discussion here, this exception/exclusion will be referred to as the “well-being activity exclusion.”) A key point for the City was that Leipzig was not being paid to play basketball, but rather was being paid to be a firefighter.  In rejecting the City’s arguments, the Court adopted the reasoning of the lower court, which noted:

In the Court’s view, “the well-being activity exclusion [was] not applicable because Leipzig was being compensated by the City to stand ready at the fire station at the time of his injury.” (Emphasis added.) Indeed, Leipzig was encouraged and ultimately paid to engage in fitness activities while on active duty in order to be ready to handle the stresses and demands of firefighting. As such, the injury he sustained playing basketball while on duty grew out of or was incidental to his employment as a firefighter and was compensable under the worker’s compensation law.

So, what does this all mean for you? Last time you checked, you are not in the firefighting business and may not need your employees to be physically fit to handle the rigors of their positions. But do you send employees to golfing events to network? Does your company encourage (or allow) employees to engage in recreational or sporting activity on company time because it believes such activity lends itself to happier, more productive employees and/or builds camaraderie in the workplace? Is there a makeshift basketball hoop set up in the back of your facility, or does your company have softball or kickball leagues employees are encouraged to participate in? Are employees engaging in these activities during the workday (even if during a break) or while on the clock? If so, there is a chance (albeit small, perhaps, in some jurisdictions) that an injury resulting from such activity could be found to be work-related and compensable. Indeed, in one published case, an employee injured while playing softball was considered to have suffered a compensable injury because, in part, her employer encouraged sporting activity, and the injury occurred during a paid break in the workday. See E.C. Styberg Engineering Company, Inc. v. Labor and Industry Review Commission, 2005 WI App 20, 692 N.W.2d 322 (Wis. Ct. App. 2004).

If nothing else, the City of Kenosha case and others like it should serve as notice that what may initially appear to be a nonwork related injury may be considered to be work-related for worker’s compensation purposes. Given this, employers should take a close look at what they encourage (or allow) employees to do recreationally during working hours and whether employees are or have been compensated while engaging in such activity.  If employees are encouraged or allowed to engage in recreational activities in furtherance of the interests of their employer, the activity should be closely monitored and regulated (to the extent possible) to reduce the chance of an injury that could later be interpreted as compensable under worker’s compensation laws.

It seems almost trite to joke that only the government would propose to lessen the reporting burden for employers by requiring that employers report more information. Yet, that is what the Office of Federal Contract Compliance Programs (‘OFCCP”) has done in its proposed changes to its Scheduling Letter, the current version of which expires on September 30, 2011. The proposed changes would broaden the scope and type of data the OFCCP asks for in Scheduling Letter responses, imposing new burdens on employers who contract with the federal government.

As background, Executive Order 11246 prohibits federal contractors from discriminating against applicants and employees on the basis of race, color, religion, sex, or national origin. The OFCCP administers Executive Order 11246 (as well as certain equal employment opportunity statutes covering the federal government), in part by conducting periodic compliance reviews of federal contractors. Whenever a federal contractor is selected for a compliance review, the OFCCP notifies the contractor of the review by what is called a Scheduling Letter. But the Scheduling Letter provides more than notice; however, it also provides employers with an itemized list of information that must be furnished to the OFCCP within 30 days of receipt of the Scheduling Letter.

The upcoming expiration of the current version of the Scheduling Letter has provided the OFCCP an opportunity to revisit the itemized listing in the Scheduling Letter, and on May 12, 2011, the OFCCP issued notice that it intended to broaden the nature and scope of the itemized listing. Under the proposed changes, federal contractors would be required to provide the following information to the OFCCP:

• Copies of all employment leave policies, including maternity leave policies, religious accommodation policies, and federal Family and Medical Leave Act policies. If these policies are in a handbook, the proposed changes would require the contractor to provide the entire handbook to the OFCCP.
• Applicable collective bargaining agreements.
• Detailed data for all employment activity, such as applications, hires, promotions, and terminations, broken down by job group and by job title. Moreover, the requested data is to be broken down into specified minority groups. Currently, contractors are only required to provide summary information on employment activity by either job group or job title and by race and gender, rather than by specific minority groupings.
• Specific demographic data on all employees who have been terminated in the previous affirmative action plan year, based on job group and job title on all employees who have left the contractor. Moreover, contractors must specify whether the employees were terminated voluntarily or involuntarily.
• Expanded required compensation information. Currently, contractors can provide summaries or aggregate data. But under the proposed changes, contractors would be required to provide the following for each employee as of the most recent February 1 calendar date: race/ethnicity, sex, hire date, job title, EEO-1 category, job group, and “compensation.” The term “compensation” includes “base salary, wage rate, and hours worked.” If any employee has “[o]ther compensation or adjustments to salary such as bonuses, incentives, commissions, merit increases, locality pay or overtime,” then the contractor must list that information for each separate employee. Finally, the contractor must provide policies and documentation that explain the factors and reasoning used to determine compensation.

The OFCCP maintains that, despite requiring the production of greater and more detailed information, these new requirements will actually reduce the amount of time it takes for a contractor to respond to a Scheduling Letter-by 2 hours (from approximately 28 hours to 26 hours). This is supposedly due to the more extensive computer records kept by contractors, which make detailed data production possible.

Many contractors and potential contractors are wary of the new burdens the proposed changes could impose. Yet, contractors are not without redress; as with other proposed changes to federal regulations, there is a period of public comment on the OFCCP’s proposed changes (click here for information on how to submit a comment). Interested contractors have until July 11, 2011, to make comments on the proposed changes.

To read more about the expansion of the firm, please click here.